Appoint company secretary

Appoint UK company secretary for a public limited company is compulsory and it is optional for a private limited company.

A public limited company (PLC) must appoint a company secretary as required by the Companies Act. It is the duty of your company directors to take all reasonable steps to secure that your company secretary has the requisite knowledge, experience and qualifications. One of the reasons for such strict rules on appointment of secretary is that statutory filings for a PLC is stricter and more complex compared to a private company. Especially, a public limited company that have their shares quoted in the London Stock Exchange.

Skills and qualifications

Generally, your company secretary must have the following skills and qualifications detailed below. The person to hold the secretary position must be or have,

  • At least three of the five years immediately proceeding his appointment as your company secretary.
  • A barrister, advocate or solicitor called or admitted in any part of the United Kingdom.
  • Capable of discharging the functions of a company secretary.
  • Member of any of the professional bodies listed below.

Professional qualification

Additionally, the person to hold the company secretary position must be a member of at least one of the following professional bodies.

Exception

Whereas, there is an exception to the skills and qualifications required for the appointment of a company secretary for a private limited company.

If you wish to appoint a company secretary, the person does not need to have a professional qualification.

How to notify Companies House of your new company secretary

Use the form AP03 to notify Companies House for an appointment of your new company secretary. Subsequently, if you would like to change the details of your company secretary, please complete the form CH03 and deliver it to Companies House.

Thereafter, If you would like to remove your company secretary, please complete the form TM03.

Generally, Companies House requires every limited company to submit their confirmation statement once every 12 months. You would have the opportunity to update your company secretary’s information if there are any changes you have not yet notified Companies House.

Disqualified company directors register

Companies House maintain a disqualified company directors register. Anyone can search the register.

You may use the disqualified company directors register to check on the length of disqualification order imposed on the person. If you know the person has been disqualified as company director previously and yet you cannot find his/her name listed there. It is likely that his/her disqualification order has expired. Companies House automatically removes the individuals’ details once the disqualification order expired. And, Companies House updates the database weekly. Contact Companies House if you have any questions.

The register publishes the following information about a company director.

  1. The director name with the surname in capital letters.
  2. Address
  3. Date of birth
  4. Nationality
  5. last known registered address
  6. The length of disqualification imposed as a company director including the start and the end dates.
  7. If the director has more than one disqualification, it will show here too.
  8. The reasons he/she was disqualified from being a company director. For example, Company Directors Disqualification Act 1986 (Section 6): Duty of court to disqualify unfit directors of insolvent companies.
  9. The company names associated with his/her disqualification.
  10. Lastly, you will also see if the disqualified director has permission from the court to act as a company director.

The Insolvency Service

The Insolvency Service department publishes director disqualification outcomes online. The conduct of the director which lead to his/her disqualification is published here. This information is available for public inspection 3 months from the date of publication thereafter it will be removed.

The Authority updates the database weekly.

Non-director bankruptcy

For individual who was not a company director but declared bankrupt, please search the Individual Insolvency Register. For cases within the last 3 months, search the Bankruptcy and debt relief restrictions outcomes.

Limited company or sole trader

The advantages and disadvantages of whether to use a limited company or sole trader to start a business is important consideration.

First of all, there are two types of limited companies. A private limited company and a public limited company. Registration of a private limited company is relatively straight forward. You only require one person to set up the company. You can be the director and shareholder of the company. In addition, your share capital can be as little as £1. That’s all you need to get started.

On the other hands, incorporation of a public limited company has more legal administration requirements to it such as you cannot trade until you get a trading certificate. Furthermore, a public limited company requires minimum share capital of £50,000. It is a bit expensive.

Whereas compared to setting up a sole trader business, the setup is simpler. You only need to register your business with HM Revenue and Customs. Then you are good to go.

Limited liability

In terms of business liability, your company shoulders all the liability as opposed to the person running the business. This is because the company and the owner of the company are considered a separate legal entity. Your liability is limited to the amount you invested in the share capital of your company. This includes any guarantees you gave when raising finance for your business.

For example, if you invested £10,000 into your company as share capital and your losses would be limited to this amount in the event of your business failed. In other words, your maximum loss would be £10,000. That’s it.

As with a sole trader or proprietorship, you are exposed to unlimited liability. In other words, your personal assets can be auctioned to pay off your business debts if your business fails.

For instance, when your sole proprietorship business failed and you have a business debt of £100,000. You would have to satisfy this debt using your personal assets no matter what. You may risk being sued bankrupt if you cannot settle the debts quickly. In this respect, sole proprietorship is a bit risky compared to trading using a company. There is no safety net. Basically you can lose everything at once.

Continuity

Moreover, trading as limited company also provides continuity of the business. The ownership of the company can be transferred easily. In this circumstance, you only have to transfer your share to your next of kin by filing the relevant Companies House forms to that effect.

Whereas for sole proprietorship business normally ceases when the business owner wants to retire or die. However, there may be a way to keep your sole proprietorship business continuity by incorporation.

Company Law

Besides, the Companies Act 2006 have made the requirement to appoint a company secretary for a private limited company is optional. This means that a single person can set up a limited company by himself as discussed above. You can be the sole director and also the sole shareholder of your company if you wish. Except that you must not be an undischarged bankrupt or disqualified by a court from holding a directorship.

On the other hands, as a sole trader, you do not need to comply with the company law. Less hassle for your business.

Stability

Also, many financial institutions, banks and suppliers viewed a limited company as being a form of more stable business entity compared to a sole trader. This is partly because the company accounts, shareholders and directors details are available for public inspection independently at Companies House. This provides more reliable information to creditors about your company history.

On top of that limited company must follow company law when comes to filing Companies House forms and accounts with the Registrar. There is a set of standards maintained.

Administration

For administration purpose, a limited company must deliver confirmation statement and company accounts to Companies House every year. Also, you must maintain statutory books for your company. This includes notifying Companies House when there is a changes in the registered office or director etc. You can notify Companies House by filing the correct forms online or on paper. You would require your authentication code to file online. The authentication code is the electronic equivalent of your director and secretary’s signature. Keep it safe.

Additionally, failure to fulfil the legal obligations mentioned above, your director is risk being prosecuted and are subject to fines. There is a late filing penalty for delay in filing your accounts to Companies House too. However, Companies House sends reminders to your registered office to help you (as the director) to comply with the law. Just make sure your registered office address is up to date. Do not worry too much.

To top it up, your company must submit a corporation tax return with HM Revenue and Customs. Your accounts must comply with the Companies Act. In some instances, you must submit audited accounts.

For sole proprietorship, you only required to file self assessment return with HM Revenue and Customs. And the accounts are also much simpler compared to that of a company accounts. The administrative side of thing is relatively simple.

Conclusion

It seems that whether to use a limited company or sole trader to start a business, a company is more attractive. It gives professional image and project stability to the public. Most importantly, using a company to trade limit your liability and debts in the event of winding up.

Seek advice on complex tax affairs

However, if you have complex tax affairs seek advice from the specialist tax advisers. They would assess your personal tax affairs thoroughly and present you to the best solution that would minimize your tax liability overall.

For example, whether to buy an asset under your personal name or under your company name; or you have income from oversea or inheriting assets all these may have an impact on your overall tax liability. For this reason, you would only gain by getting specialist tax advice and nothing to lose.

Good luck with your business adventure.

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