Limited Liability Partnership (LLP)

Private Limited Company - LTD
England, Wales and Northern Ireland

Unincorporated Partnership

Company Limited by Guarantee - CLG
England, Wales and Northern Ireland

Public Company Limited by Shares - PLC
England, Wales and Northern Ireland

Limited Partnerships – LP

What is the main source of law authorising this entity form?

Companies Act 2006

Give a brief summary of the entity form:

Does the entity possess separate legal personality?

Possesses separate legal personality.

Governing document(s)

A company is governed by its constitution, namely the Articles of Association which sets out its internal rules including how shares can be transferred and the rights attaching to shares. The person forming the company can either prepare tailored articles or adopt the relevant statutory model articles (or a combination of both).

Liability of incorporators / shareholders

Liability of shareholders is limited to the amount subscribed for shares (subject to circumstances where limited liability can be lifted as a result of wrongdoing by directors who are also shareholders).

(Governing) bodies

Companies incorporated in England and Wales are governed by the laws of England and Wales.

Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions, equity acquisitions, etc.)?


Can this type of entity be publicly listed or held?

No but a limited company can be converted into a public limited company if required and if the company meets the relevant criteria to become a PLC.

Can this type of entity be used for a non-profit or charitable organization?

Yes but it may not necessarily be the best option and it may be better to use a company limited by guarantee, charitable incorporated organisation, charitable community benefit society, charitable trust or unincorporated charitable association.

Give a brief summary of the process of incorporation, formation, or organization, including:

Main documents required

The main documents to be lodged with the Registrar at Companies House on incorporation are:

  • Form IN01 – to include information in relation to the company’s intended principal business activities and a statement of capital, initial shareholdings and persons with significant control (amongst other things);
  • Memorandum of association;
  • Articles of association (if amending or replacing model articles).
Involvement of notary, company register, governmental authorities

Company starts to exist when Registrar issues the certificate of incorporation (which details the official company number and date of incorporation).

Timing (estimate) and main costs, including registration and similar fees (excluding legal fees)

Normal hard copy service: certificate of incorporation usually issued within 8 to 10 days and costs £40.

Electronic service: £12 and the company is usually registered within 24 hours.

Minimum number of incorporators / shareholders and residency requirements

Minimum of 1 shareholder who must be an individual over the age of 16. No residency requirements.

Minimum number of directors (or other applicable officers) and residency requirements

Minimum of 1 director (who can be the same person as the sole shareholder). No residency requirements.

The government has announced its intention to impose a ban on corporate directors.

Minimum share capital, or equivalent, and payment requirements (including opening a bank account)

No minimum share capital or payment requirements. A company will usually have a share capital account (to account for the proceeds from the issue of shares up to their nominal value) and a share premium account (to account for the proceeds from the issue of shares over and above their nominal value).

Is the physical presence of incorporators / directors required in the jurisdiction for incorporation, formation or organization?


Is a tax identification number, or equivalent, required? If so, how is it obtained?

A company is issued with a Unique Taxpayer Reference (UTR) from the HM Revenue and Customs (HMRC) shortly after incorporation. A company must register for corporation tax within 3 months of commencing business, and a UTR is essential for this.

What is the title of the applicable company registry?

Companies House.

What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.:

The following must be filed at Companies House (and are all publicly available):

  • Memorandum of Association;
  • Articles of association (if amending or replacing the model articles);
  • Annual confirmation statement (previously the annual return) containing details about directors, shareholders, registered office address and share capital;
  • Annual statutory financial accounts;
  • Information in relation to persons with significant control;
  • Concept of voluntary registration of company charges but, because of sanctions for non-registration, a company will usually deliver a statement of particulars for any charge it gives over its assets.


What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?

The board of directors is the executive body of a company and their main job is to make decisions on the general day-to-day running of the company. Many directors will have service agreements which will detail their responsibilities in greater depth.

The board of directors’ statutory duties are governed by the Companies Act 2006 (CA 2006) which supplement the fiduciary duties set out in case law. Principal duties include the following duties for a director to:

  • Act within his or her powers (s 171 CA 2006);
  • Promote the success of the company for the benefit of the members as a whole having particular regard to the matters set out in s 172 CA 2006;
  • Exercise independent judgment (s 173 CA 2006);
  • Exercise reasonable care, skill and diligence (s 174 CA 2006);
  • Avoid conflicts of interest (s 175 CA 2006);
  • Not accept benefits from third parties (s 176 CA 2006); and
  • Declare an interest in a proposed transaction or arrangement (s 177 CA 2006).

Directors should also have regard to the UK Corporate Governance Code.

How are the members of the executive body appointed, dismissed and replaced?


  • The first directors of a company are appointed by notification to Companies House during the incorporation process of a statement of proposed officers setting out the particulars of each director (to include a statement that each director has consented to act in that capacity)
  • Subsequent directors are appointed by reference to the company’s articles. The statutory model articles enable the board of directors to appoint directors (if applied and this could be varied). The general meeting (of the shareholders) also has the power to appoint directors under the model articles.


  • Directors may be removed by ordinary resolution at a general meeting (passed by a simple majority of the shares of the shareholders who vote) provided special notice of the meeting has been given and the statutory procedure set out in the CA 2006 has been followed. However, advice should be taken when removing a director to ensure that any contractual provisions entered have not been breached.
  • A company’s articles may also provide for a different process in order to effect a dismissal/replacement.

Is it possible to appoint corporate directors or must all directors be natural persons?

It is currently still possible to appoint a company as a director of an English company. However, the government have announced forthcoming changes to company legislation requiring all directors to be a “natural” person – i.e. an individual. We do not have a date for implementation of this yet.

Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?

There is no requirement to have non-executive directors and often there are none in private limited companies. They are more common in public limited companies.

What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?

There is no specific title for the body of shareholders or members who own the company.

Shareholders are responsible for the major decisions that a company must make, and the following decisions are examples of those only able to be made by shareholders:

  • Amending the company’s articles;
  • Approving a substantial property transaction;
  • Approving a contract to buy back the company’s shares; and
  • Removing an auditor of the company.

What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?

Shareholder decisions (examples of which are noted above) are either passed by way of:

  • Ordinary resolutions or;
  • Special resolutions.

An ordinary resolution is passed:

  • At a meeting on a show of hands by a simple majority if it is passed by a simple majority of the votes cast by those entitled to vote; or
  • On a poll taken at a meeting by a simple majority if it is passed by shareholders representing a simple majority of the total voting rights of shareholders who (being entitled to do so) vote in person, by proxy or in advance.

A special resolution is passed:

  • At a meeting on a show of hands if it is passed by a majority of not less than 75% of the votes cast by those entitled to vote; or
  • On a poll taken at a meeting if it is passed by shareholders representing not less than 75% of the total voting rights of shareholders who (being entitled to do so) vote in person, by proxy or in advance.

All resolutions may be passed by written resolution rather than calling a general meeting (providing the statutory procedure is followed), except where the decision involves dismissing a director or the company’s auditors.

The quorum for the meeting of shareholders is usually set out in the company’s articles of association. The default position (subject to anything contrary in the articles) is that a quorum is 2 shareholders, unless it is a single-member company, in which case the quorum is 1.

Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?

Different accounting obligations apply to different companies dependent on turnover, balance sheet total and number of employees. Based on turnover a company would be described as a micro-entity, if turnover is £632,000 or less; small, if turnover is £10.2 million or less; medium, if turnover is £36 million or less; or large, if £36 million or more).

What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?

All companies (whether or not they are in business) must keep adequate annual accounting records.

These must be filed at Companies House within 9 months from the Accounting Reference Date (ARD) (the date on which a company’s financial year ends unless it is the first accounts of the company being filed in which case the deadline is 21 months after registration with Company House).

Is the entity permitted to determine its own financial year?

The ARD set on incorporation is the last day of the month of the anniversary of the company’s incorporation (unless otherwise specified or varied).

The ARD can be altered by submitting Form AA01 to Companies House.

Is the entity subject to any statutory (external) auditor obligations?

Unless the company is exempt (see below), companies must appoint a statutory auditor and file an auditor’s report on their accounts, strategic report and directors’ report (at the same time as filing their annual accounts).

Exemption for small/dormant/qualifying subsidiary companies – but these companies must still file unaudited

Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?

Unless exempt, all companies must appoint an external/statutory auditor.

A private company is not required to have a Company Secretary (a dedicated person who deals with legal administrative requirements) and smaller companies generally do not have them.

What is the title designated for 'ownership interests' (e.g. shares, quota, interests, membership)?

Membership interests are held in shares. Holders of shares are referred to as shareholders or members.

Are different classes of ownership interests possible? If so, what are some examples of different classes?

Different classes of shares are possible and often used. Common examples include:

  • Ordinary shares (shares other than those which carry a special right to dividends or capital);
  • Preference shares (shares which rank ahead of other shares for dividends and capital and which can sometimes carry limited voting rights);
  • Deferred shares (shares with no right to dividends either for a set period or until certain conditions are met);
  • Redeemable shares (shares that are to be redeemed or are liable to be redeemed at the option of the issuing company or the holder).


What documentation is required for the transfer of ownership interests?

Typically, a transfer of shares will involve the following documentation:

  • Stock transfer form;
  • Share purchase agreement;
  • Board minutes of the company approving the registration of the stock transfer form (subject to stamping or exemption to stamping);
  • New share certificate issued to the transferee; and
  • Other ancillary documents depending on the transaction and the buying and selling entity/person.

Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?

Following approval of the registration of a transfer of shares (by the board of directors), the administrative requirements are:

  • Unless the consideration is less than £1,000, the stock transfer form must be sent to HMRC for stamping or adjudication as non-stampable. Due to the COVID pandemic, the current HMRC process does not require physical stamping but electronic submission of the stock transfer form and written confirmation is provided by HMRC that stamp duty has been paid.
  • the new shareholder should be entered into the company’s register of members, subject to the stock transfer form being stamped, exempt from stamping or adjudicated as non-stampable.
  • the register of transfers should be updated (if the register is maintained);
  • the register of people with significant control (if applicable) should be updated and notice of any change notified to Companies House; and
  • when the next confirmation statement is due for filing, the transfer will need to be reflected in the statement.>/li>

Are there any applicable stamp duties imposed when transferring ownership interests?

On a transfer of shares where the consideration exceeds £1,000, the transferee must pay the sum of 0.5% of the consideration as stamp duty to the HMRC unless the transfer is exempt from stamp duty (the stamp duty is calculated on each transfer (i.e. stock transfer form) and rounded to the nearest £5).

How are shares issued? (including information on payment obligations, registration requirements)

Shares are deemed to be issued when the recipient has been entered in the company’s register of members.

It is not necessary to file the register of members at Companies House but an offence is committed if the company fails to keep and update its register of members. It is a requirement to notify Companies House of persons with significant control of the company.

Further information on equity contributions, e.g., non-cash payments on shares, (share premium) contributions without issuances of shares, can partially paid shares/ownership interests be permitted and what are the restrictions on them?

Non-cash payment on shares is permissible and common examples of alternative consideration include:

  • Allotment/issue of shares in the buyer to the seller instead of cash consideration;
  • Allotment/issue of shares in consideration of the capitalisation of debt or in consideration for a service provided; and
  • A share for share exchange, meaning shares in one company are exchanged for shares in another.

Capital contributions (without issuing shares) are not recognised by English company law and are not legally equivalent to share premium. However they do constitute owners’ equity generally and can be used as the directors see fit (subject to more limited uses).

Any requirements with respect to share cancellation, share repurchase and other capital reductions

Share cancellation

  • Redeemable shares (which a private limited company is permitted to issue) are treated as cancelled when they are redeemed and the amount of the issued share capital is diminished by the nominal value of the shares redeemed.

Share buy-back

  • A private limited company may purchase its own shares, but only in accordance with strict statutory conditions and subject to restrictions/prohibition in its articles.
  • A buyback can be financed:
    • From distributable profits (the most common method).
    • From the proceeds of a fresh issue of shares made for the purpose of financing the buyback.
    • Out of capital.
    • If permitted by the articles, out of capital up to, in any financial year, the lower of £15,000 and the nominal value of 5% of its fully paid share capital using the de minimis exemption, which bypasses the standard procedure for financing a buyback out of capital.
  • There are various conditions for a buyback including that shares must be fully paid.

Other capital reduction

  • Permissible if approved by a special resolution of shareholders (provided not prohibited by articles) which is supported by either court approval or a solvency statement (which is to be provided by the directors).

Any requirements with respect to distributions to shareholders?

Subject to part 23 of the CA 2006, distributions are permissible if:

  • There are sufficient distributable reserves available to make the distribution (cannot be made out of capital) (s 830(1) of the CA 2006).
  • The distribution is justified by reference to relevant accounts (s 836 CA 2006).

Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?

Shareholders agreements (setting out the relationship between the shareholders) are common.

Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?

The taxes applicable to a private limited company are as follows:

  • Corporation tax
  • Value Added Tax (VAT)
  • Stamp duty where applicable
  • PAYE (income tax and national insurance on staff salaries)

Other than tax, there are is an annual filing fee with the confirmation statement of £13 (if filed online) or £40 (if filed by paper). There are also penalties/fines applied for late filing of documents with companies house and in particular automatic fines apply when the statutory annual accounts are not filed on time.

What are the general corporate tax rates? (Specify if there is a national versus local distinction).

The corporation tax rate for company profits is 19% and is subject to change if government policy changes.

Summary of any specific matters, e.g. recent or prospective major legal developments


Although there are some provisions of the CA 2006 which have derived from EU law, there has not been a significant impact a as a result of Brexit. However, certain amendments made by certain Brexit statutory instruments have sought to deal with deficiencies in retained EU law. These changes include that from 31 December 2020:

  • the filing requirements for European Economic Area (EEA) companies appointed as a corporate director or company secretary have changed such that same information must be provided in respect of them as if non-EEA directors;
  • all overseas companies with a UK establishment or that wish to open a UK establishment have the same registration, filing and disclosure requirements irrespective of whether they are incorporated in the EEA;
  • the right of freedom of establishment in accordance with the Treaty on the Functioning of the European Union no longer applies to the UK and the treatment of UK incorporated companies in an EU member state therefore depends on that member state's national law; and
  • the cross-border merger regulations have been revoked.

Search by:

Need more information?
Contact a member firm:
Simon Bickerdike
Penningtons Manches Cooper LLP
UK - England

Catherine Moss
Shakespeare Martineau LLP
UK - England

Damian McParland
Millar McCall Wylie LLP
UK - Northern Ireland