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There may be a number of reasons you’ll want to remove your existing company director and/or appoint a new individual to the role. Whether you’re planning a major reshuffle at the top for the sake of changing course of your limited company’s ethos, or an individual is underperforming, to appoint and remove a company director from the vantage point of your business address is a major decision.

To help you make an informed decision, and to complete the process to appoint and remove a company director swiftly, this article outlines the roles and responsibilities of a company director followed by the correct process to appoint and remove a company director from your limited company.

Who Can Become a Company Director?

Before understanding how to appoint and remove a company director, it’s important to recognise the eligibility of a company director.

The following can qualify as a company director:

• an individual (can be the company secretary, shareholder)
• a corporate body
• a partnership
• a group
• another limited company
• an organisation/business/charity

The following are not allowed to become company directors:

• a company auditor
• a banned company director (cannot be a director of another company while their forbid is still in place)
• individual under the age of 16 years
• an un-discharged insolvent

How to Appoint a Company Director

You can appoint a company director during and after your company incorporation and the process may not be as difficult as you may first assume:

• Appoint a Company Director During Incorporation

The company’s maiden directors are appointed during company formation. Their details are provided to Companies House on the relevant documentation. You can register a new company and appoint the first directors with the use of Companies House form IN01, or you can complete an online application form during your company set up through a formations company.

• Appoint a Company Director After Incorporation

It’s up to company members to decide who they want to appoint as a company director as well as specifying the powers that this new director will have.

Should the current directors be permitted to choose a new director, they will be expected to pass a resolution at a board meeting or in writing. Additionally, a majority of the directors must vote in favour of the resolution. In case there are just two directors, both of them must accept the appointment.

After the appointment has been authorised, the company secretary or the present director will have to inform Companies House within fourteen days of the decision. The following information must be submitted to Companies House on the company formation application or the “appoint a director” form AP01:

• Appointment Date
• Title and complete name
• Old names
• Birth date
• Nationality
• Business profession
• Country of residence
• Home address
• Service address

If you choose to appoint a corporate director, then the company must have at least one other natural personwho is a director. This has to be processed by submitting the following details on form AP02:

• Name of company.
• Company registration number (also found through a Companies House search).
• Appointment date.
• Registered name and number of the corporate director.
• Registered office or principal address of the corporate director.
• Corporate director’s place of registration.

When a director is appointed during or after incorporation, his/her occupation will be requested. Since the role is mainly administrative and managerial, directors do not need formal qualifications, and incidentally, directors may have specific professions or business occupations in addition to their directorial role. Therefore, you can list a director’s occupation as a specific profession where applicable.

How to Remove a Company Director

There are a number of reasons why you may need to appoint and remove a company director, and although removing a company director is not always the easiest decision to make, it may serve to be crucial for the success of your business.

Company directors can resign or be removed by company members (shareholders or guarantors) at any time as long as they do not encroach set provisions in the Companies Act 2006, the articles of association or a director’s service contract.

• Remove a Company Director Through Voluntary Resignation

If you request a director to take a voluntary resignation or he/she resigns in adherence to their contract, Companies House has to be notified online or by post using Form TM01 within 14 days of the resignation. The company’s statutory register of directors must be updated according to the resignation and subsequently, the public register will be updated in relation to the new circumstance.

• Remove a Company Director Under the Articles of Association Provisions

The model articles of association detail the various provisions required for the immediate removal of a director in the following scenarios:

A provision of the Companies Act 2006 or any other UK legislation prohibits a director from remaining in office.

A director has a bankruptcy order against his/herself.

A registered medical practitioner deems a director physically incapable of exercising their position as director.

• Remove a Company Director Through Ordinary Resolution of Members

If the articles of association do not cover the reasons for a termination, then the shareholders may remove a director through the passing of a resolution. This is normally practised when the shareholders are not content with a director’s performances or actions. As long as the shareholders do not violate any legislative or contractual agreement, an ordinary resolution with a simple majority vote will suffice.

In order to do this, a Special Notice of at least 28 days before the vote is taken at a general meeting must be given to all shareholders. The director in question should also be notified in order to make representations and attend the meeting. If the majority vote in favour of the director to be removed, then form TM01 must be filed at Companies House within 14 days.

• Remove a Company Director Through Removal by Authority

The court, or another authoritative institution can remove a company director if he/she fail to fulfil their statutory duties and responsibilities, or if their conduct is judged to have been unfit or unethical; an official complaint may be made by a member of the public of another company member to the Insolvency Service. A “guilty” company director can also be disqualified by:

1. Court
2. Companies House
3. HMRC,
4. Competition and Markets Authority
5. Financial Conduct Authority
6. A company insolvency practitioner

“Unfit” conduct is defined as:

1. The continuation of company trading to the detriment of creditors (when a company is insolvent and unable to pay its bills).
2. Failure of proper accounting documentation.
3. Failure of proper filing of annual accounts and/or annual returns.
4. Failure to process tax returns and/or pay tax liabilities to HMRC.
5. Failure to co-operate with an insolvency practitioner or the Official Receiver

• Remove a Company Director Through Disqualification

A disqualified company director is not allowed to hold another company director position in any other company for the duration of their ban (this can be up to 15 years).

Additionally, disqualified directors cannot take a similar position in a foreign company with UK links, be involved in forming, marketing or running another company, and he/she is not allowed to be a member (partner) in a Limited Liability Partnership (LLP). Any such violations can lead to a significant fine or imprisonment of up to 2 years.

Directors can be disqualified for:

• Failing to meet the minimum age requirement of 16 years.
• Declaring bankruptcy or involved in any bankruptcy proceedings.
• Are served with a Debt Relief Order.
• Continuation of trading during company insolvency (inability to pay its bills).
• Failing to maintain accurate accounting records.
• Failing to file annual accounts and/or annual confirmation statement at Companies House.
• Failing to pay taxes.
• Utilising company finances/assets for personal gain.
• Failing to fulfil statutory responsibilities in accordance with the Companies Act 2006.

What Roles Does a Company Director Hold?

When you want to appoint and remove a company director, it’s important to fully understand the roles of the position so that you appoint and remove the correct individual based on their adherence to the role’s responsibilities.

The duties and responsibilities of a company director are outlined in the Companies Act 2006, the articles of association, and any service contract that might be effective between a director and the company.

According to the Companies Act 2006, company directors must:

• Act within designated powers
• Promote the company’s success
• Carry out independent judgment
• Exercise reasonable skill, care, and diligence
• Avoid conflict of interest
• Reject third-party benefits
• Declare interests in proposed/existing transactions/arrangements with the company

Remember...

When you want to appoint or remove a company director, you must ensure that you’re following the correct protocol and submitting the necessary details to Companies House.

It’s worth noting that If you’re the sole director of a company and want to resign, you can appoint another director to run the company on your behalf. Alternatively, for a solvent company, you can sell the business and its assets to another entity or choose to dissolve it and sell the assets.

To find out more about how to appoint and remove a company director, or how to obtain a registered office address for your business, contact our professional and experienced virtual office experts, today.

Congratulations! You’re either a newly formed business, or you’ve been running your brand from a reputable business address for some time. But with the plaudits comes the pressure; not least the overwhelming number of documents you must process and submit. And when you’re a UK company limited by shares, there may be a time where you need to transfer shares. Enter the stock transfer form.

What Is a Stock Transfer Form?

In order to transfer shares in UK companies limited by shares, you must complete a stock transfer form. A stock transfer form records the share transfer details, including names of the buyer(s), the number and type(s) of shares, and what the value or monetary exchange for those shares were (for example, “the consideration”). Simply put by GOV.UK, a stock transfer form “transfers shares from one person to another”.

The two types of stock transfer forms:

• J30 form (used to transfer fully paid shares)
• J10 form (used to transfer unpaid/partly paid shares).

The J30 form is perhaps the most commonly used form since the transfer of fully paid shares is more prevalent.

Send Your Stock Transfer Form to HMRC

According to GOV.UK, when you’re completing a stock transfer form to send to HMRC you must provide comprehensive details of the sale, including:

• the shares being transferred (the quantity, class and type, for example 100 ordinary shares, ABC Limited)
• the buyer
• the seller

You also need to provide the value of what you paid for the shares in either:

• cash
• other stock and shares
• debt

This is known as the chargeable consideration.

Enter “Nil” as the consideration if you do not give any consideration for the shares. If you give consideration in money for the shares, state how much.

If the transfer is exempt from Stamp Duty, or no chargeable consideration is given for the transfer, you need to complete one of the certificates on the back of the stock transfer form (Certificate 1 or Certificate 2). You need to complete a different certificate depending on what you paid for the shares.

It will take approximately 5 to 10 days for HMRC to process and return the stamped stock transfer form and share certificate. Be sure to store the returned stock transfer form with your company records, issue a new share certificate, and update your statutory register of members, accordingly.

The Different Circumstances of Shares

The reporting of share transfers and payment of stamp duty will be dependent on the circumstances of a particular share:

• You do NOT need to notify HMRC (or pay any subsequent stamp duty) where share transfers have a sale value, or “chargeable consideration”, of £1,000 or less. As stated, this includes shares that are given for “nil” consideration (i.e. gifted to someone) — this is when Certificate 1 (found on the reverse of the share transfer form) must be completed and signed.

• When share transfers are classified as exempt of stamp duty (e.g. they are left to someone in a will), there is NO need to notify HMRC of the transfer — this is when Certificate 2 (found on the reverse of the stock transfer form must be completed and signed).

• If the share transfer value exceeds £1,000 and is otherwise subject to stamp duty, then the transferee (new shareholder) must pay stamp duty to HMRC at the rate of 0.5% of the sale value. This is when the stock transfer form must be completed and sent to HMRC’s stamp duty office for stamping within 30 days of the date of the transfer. The form must be accompanied by the existing share certificate and a covering letter. You can pay stamp duty on shares to HMRC by BACS transfer, online, or by cheque. If a BACS transfer or online payment is made, it’s advised to provide the payment reference along with the amount and date paid.

Companies House Does Not Need to Receive Your Stock Transfer Form

A stock transfer form does not need to be submitted to Companies House. However, a company director must update the company’s statutory register of shareholders in order to record the details of the share transfer. As stated, a copy of the stock transfer form, along with any resolutions and copies of share certificates relating to the transfer, must also be kept with the company’s statutory registers.

Simply put, Companies House should be informed of the new share transfer information via the next updated confirmation statement (Companies House form CS01).

What Details Are Required on the Stock Transfer Form?

The following details will be required:

• Your company’s name
• Company Registration Number (CRN)
• Quantity and class(es) of shares being transferred
• Existing shareholder (transferor) name and address
• New shareholder (transferee) name and address
• The amount paid for the shares
• If applicable, the details of non-cash payments
• Transferor’s signature
• If applicable, stamp duty liability

It’s worth noting, for some companies, current shareholders have to pass a special resolution in order to waive their right to pre-emption on the transfer of shares.

Remember...

Legally, there are no restrictions on the number of shares a private company can issue during or post incorporation, in accordance with the Companies Act 2006. However, some restrictions may be included in the articles of association and shareholders’ agreement (find out how to get a copy of memorandum and articles of association).

Most importantly, upon completion of the transfer of company shares, the director(s) must provide a copy of the stock transfer form to both the transferor and transferee. The company should also keep a copy with its statutory records stored at the registered office or SAIL address.

To find out more about a stock transfer form, or for help and advice with sending a stock transfer form to HMRC, contact our professional and experienced virtual office experts, today.

You may be the proud owner of a new business, functioning from a credible business address, and envisioning a bright future ahead. But if you’re unsure about exactly what a company director’s role entails, then you may find yourself hindering your company’s progress. At best.

This article outlines all you need to know about the role of a company director and help you understand and master your own position at the top.

What Defines a Company Director?

A company director is chosen by a limited company to manage its daily business activities and finances to ensure all legal filing requirements are met. A company director is required to operate with integrity and abide by the law in order to make decisions for the betterment of the company and its members (shareholders). A director can bind the company into valid contracts with third-parties (buyers, lenders, suppliers etc) and act as trustees for a company (but not the individual stockholders).

The Business Directory defines a director as:

“An appointed or elected member of the board of directors of a company, who with other directors, has the responsibility for determining and implementing the company’s policy. A company director does not have to be a stockholder (shareholder) or an employee of the firm, and may only hold the office of director. Directors act on the basis of resolutions made at directors’ meetings, and derive their powers from the corporate legislation and from the corporate legislation and the company’s articles of association.”

A company director can be:

• an individual (can be the company secretary, shareholder)
• a corporate body
• a partnership
• a group
• another limited company
• an organisation/business/charity

However, a company needs to have at least one regular, natural director. A company director cannot be:

• a company auditor
• a banned company director (cannot be a director of another company while their forbid is still in place)
• individual under the age of 16 years
• an un-discharged insolvent

What Are the 7 Key Roles of a Company Director?

Although a company’s board may delegate certain powers to a board committee or an individual company, company directors technically act as a collective “board of directors”.

The Companies Act 2006 explicitly outlines the responsibilities of a company director. They’re also defined in the articles of association along with any service contract that may be in effect between a director and the business.

According to the Companies Act 2006, company directors must:

1. Act According to Designated Powers

A company director has to adhere to the company’s constitution and comply with the policy of the company and any delegated tasks — this includes the articles of association and wider constitutional issues, such as shareholder/joint venture agreements.

2. Promote the Company’s Achievements and Successes

A company director must actively exercise the dissemination of the company’s values and successes in order to sustain longevity and scale the company. Subsequently, the legislation states that a director must have regard to, but not limited to, the following:

• The potential long-term consequences of any decision made.
• Employees’ interests.
• The implementation of the company’s business relationships with suppliers, customers and others.
• The company’s impact on environmental and community operations.
• The commitment of ensuring the company maintains a reputation for high standards of business conduct.
• The obligation to act fairly and justly between company members.

3. Use Independent Judgement

A company director should use independent judgement, bearing the responsibility and accountability of making independent decisions. However, the company’s constitution/agreement must still be obeyed.

4. Maintain Reasonable Diligence, Skill and Care

A company director is expected to observe the same skill, care, and diligence to the same standards as any other reasonably diligent employee with:

• the general knowledge, skill, and experience that may reasonably be expected of a person carrying out the same functions in relation to the company.
• the general knowledge, skill and experience that possessed by the company director.

Note: A director’s actual understanding and abilities may not be enough if more could reasonably be expected of someone in his or her position, therefore a sense of recognising and adapting to the reality of individual knowledge base is key.

5. Avoid Conflict of Interest

A company director must avoid a situation in which there is/may be a company related conflict of interest — particularly in relation to the exploitation of property, information or opportunity, regardless of whether it would serve to benefit the company.

6. Reject Benefits from Third Parties

No third-party benefits should be accepted by a company director. However, it’s worth noting that there will be no recognition of wrongdoing if the acceptance cannot be regarded as something likely to cause conflict.

7. Declare Interests in Proposed/Existing Transactions/Arrangements with the Company

A company director has to declare the extent of any interest, transaction, or arrangement with the company (directly or indirectly) to the rest of the company directors.

No infringement will be recognised if:

• There is unlikely to be a conflict of interest due to reasonable analysis to determine such a conclusion of the transaction.
• An interest has not been declared because a company director is not aware that they possess the interest, or that the other directors are aware of the interest.

Remember...

A company can have more than one director (shareholders) during company set up and any time after. However, a corporate director is a term to depict a company or any other form of corporate body appointed asthe director of another company. A private company can employ as many corporate directors as it wishes (as long as there is a minimum of one appointed individual director).

When it comes to transferring shares, company directors may be prohibited from authorisation without members’ permission; members will have to pass a resolution to allow such authorisation.

If you want to find out more about a company director, or for any related assistance with setting up a company and registering a business address, contact Your Virtual Office London, today.

If you’re the proud owner of a business, functioning from a reputable business address, you may soon find yourself making important decisions with shareholders regarding the transfer of company shares.

Shares Defined

Before we look at how to transfer company shares, let’s define what company shares mean. Shares form part of a company that is limited by shares and are simply a divided-up unit of the value of a company (each share is a specific percentage of the entire business).

Limited companies can issue more shares post incorporation, and its shareholders (members) may transfer or sell their shares to other individuals at any time. Both must adhere to the procedures set out in the in the Companies Act 2006, the articles of association (find out how to get a copy of memorandum and articles of association), and the shareholder’s agreement (if applicable).

How Are Shares Transferred?

The transfer of company shares in a limited company may be exercised from one individual to another in exchange for the following:

• a monetary payment
• a non-monetary consideration such as goods/products, services, knowledge, or writing off debts
• as part of an employee share scheme
• as a gift to a family member

The transfer of company shares after company formation can be processed by completing a Stock Transfer Form. The following details will be required:

• Your company’s name
• Company Registration Number (CRN)
• Quantity and class(es) of shares being transferred
• Existing shareholder (transferor) name and address
• New shareholder (transferee) name and address
• The amount paid for the shares
• If applicable, the details of non-cash payments
• Transferor’s signature
• If applicable, stamp duty liability

You must send a copy of the Stock Transfer Form to HMRC if the transfer’s sale value exceeds £1,000. The transferee will then have to pay Stamp Duty tax of 0.5% of the total sale value.

Once HMRC receives the form, the transfer of company shares must be approved by the company’s board of directors. This can either be agreed at a meeting or through a board resolution. For some companies, current shareholders have to pass a special resolution in order to waive their right to pre-emption on the transfer of shares.

Upon completion of the transfer of company shares, the director(s) must provide a copy of the Stock Transfer Form to both the transferor and transferee. The company should also keep a copy with its statutory records stored at the registered office or SAIL address.

Share certificates have to be provided to the new shareholder as evidence of ownership. Additionally, the statutory register of members has to be updated in a timely manner, recording details of both old and new shareholders in order to reflect the transfer of company shares. If necessary, the register of People with Significant Control (PSC register/person of significant control) must also be updated.

It’s not necessary to immediately contact Companies House upon completion of the transfer of company shares since this can be outlined on your next annual confirmation statement (see confirmation statement at Companies House).

How to Issue Shares Post Company Incorporation

There could be a number of reasons why companies will be required to issue new shares, including:

• bringing in new business partners
• raising capital from external investors for funding purposes
• to pay business debts
• to introduce a bonus scheme for employees
• to gift shares to family members

There are no legal restrictions on the number of shares a private company can issue during or post incorporation, in accordance with the Companies Act 2006. However, some restrictions may be included in the articles of association and shareholders’ agreement. An authorised capital is one of the most common restrictions; it’s essentially a limit on the number of shares that can be issued.

Owners of a shareholding company can form and issue whatever type of shares they like. This can be done during company registration or once your company has been incorporated. Many companies prefer to issue “Ordinary” shares that are of equal value, providing parity on profit and voting rights between members.

Alternatively, a company may wish to issue multiple types (“classes”) and values of shares in order to provide various voting and profit rights for its members.

To issue further company shares post incorporation, the prospective member(s) must make an application to the company. The existing members must waive their right to pre-emption by passing a Special Resolution (if applicable) and adhering to any further provisions as described in the constitution.

Finally, the company must accept the allotment; normally carried out with a board resolution. Once the allotment has been exercised, the directors must provide the following details on the Return of Allotment of Shares (Companies House form SH01):

• company name
• company Registration Number
• date(s) of allotment(s)
• number, class (type), currency, and nominal value of each share
• amount paid or unpaid on shares
• details of non-cash payments, if applicable
• Statement of Capital.
• prescribed particulars (rights) attached to shares
• director’s signature

The company director has the complete responsibility for filing Form SH01 at Companies House (no later than 1 month after the allotment of company shares) in addition to the following:

• providing a share certificate to each new shareholder
• keeping copies of share certificates at the company’s registered office or SAIL address
• updating the statutory register of members
• updating the company’s PSC register (if applicable)
• reporting the changes to Companies House on the next confirmation statement

What Are the Buy-back Options?

It is not uncommon for companies to include buy-back options in their Articles. These often uphold that any directors or employees who hold shares have to transfer their shares back to the company when they leave. This ensures that only those individuals who are directly involved in the business can be shareholders; subsequently, the company always has control of who may be issued with shares.

Unlike the comparatively simple process of the transfer of company shares, buy-backs are a rather complicated affair. Any company who wishes to implement a buy-back, should seek the advice of a legal professional.

Remember...

The rights and powers of directors are listed in the Companies Act 2006 the articles of association, and any service agreement between the company and director. However, company members can alter these rights by passing a resolution.

Company directors might be prohibited from authorising the transfer of company shares without members’ permission. When a director cannot authorise the transfer of company shares, the members have to pass a resolution to permit such authorisation or allow the transfer of company shares on that specific occasion.

Any articles adopted by a private limited company that was formed after 1st October 2009 will allow company directors with a single share class to authorise the allotment of ordinary shares without the approval of existing members. However, this is still at the discretion of members because, under the articles, they have the right to restrict the directors’ powers.

To find out more about how you can transfer company shares, contact our professional and experienced company formations team now for fast, friendly, and expert advice.

Once you’ve obtained a registered office address, your business will be running in earnest along with the presence of a pile-up of paperwork. You can avoid becoming overwhelmed by the inevitable if you familiarise yourself with vital business terms and documents; particularly the memorandum and articles of association.

This guide will outline how you can get a copy of the memorandum and articles of association and detail what these documents mean for your business.

Are the Memorandum and Articles of Association a Legal Requirement?

UK companies are legally required to have both the memorandum and articles of association. Both of these governing documents are produced when a company completes its formations process; subsequently both the memorandum and articles of association will be registered at Companies House.

What Is the Memorandum?

The memorandum of association (in full) is a legal statement detailing the names of a company’s founders. Compiled in a standard format, the document lists each subscriber’s objective to become a member and incorporate the business. Essentially, it is a single document containing the names of the company’s founding members (shareholders/guarantors) who have subscribed/added their name to the memorandum.

The members’ signature to this document outlines the intention of these “subscribers” to form and join the company in question.

Can the Memorandum Be Amended?

Since the memorandum is a legal document, the format may not be changed prior to forming your company. The memorandum of association contains historical significance and will remain consistent for the lifetime of your company regardless of original or new company members leaving or joining the business. Therefore, the names of subscribers cannot be altered or removed after company set-up.

What Are the Articles of Association?

The articles of association act as a blueprint to how a company should be run. Companies may choose to select “model articles” from Companies House or change and personalise the standard document in order to create their own rules and regulations.

Technically, the articles of association are the constitution of a limited company and contain a number of pages outlining the ways in which a company should be structured and managed in relation to the following:

• Decision making
• Members’ rights, duties, and liabilities
• Directors’ duties, responsibilities and powers
• Share capital (issuing and transferring shares)
• Profit distribution
• Director appointment and removal
• Decisions regarding the appointment of company secretary
• Administrative issues

Can the Articles of Association Be Amended?

Unlike the memorandum, the articles of a company limited by shares or guarantee can be changed at any time. Any changes made to the articles of association must be agreed by a 75% majority of the company’s members at a voting process at the general meeting. Subsequently, it has to pass a special resolution, unless entrenchment provisions are in place (which may result in more onerous approval requirements).

Upon confirmation of the changes, a copy of the resolution and updated articles have to be submitted and filed with Companies House within a period of 15 days.

It’s best advised to seek legal assistance if you choose to create your own articles of association in order to avoid any potential errors in the creation and submission process.

What Are Model Articles?

Unless a company decides to form their own articles of association, the model articles from Companies House under the Companies Act 2006 are considered the default articles. They are a simple document and easily adoptable by private limited companies that issue only ordinary shares, and for some companies limited by guarantee.

Model articles are a sensible choice for small companies that are exempt from any specific provisions.

Self-formed articles are a better option for companies that have multiple share classes and more than a single shareholder as the document may be tailored to meet a company’s individual goals, ensuring all company members are fairly treated in adherence to the shareholders’ agreement.

Keep the Memorandum and Articles of Association at Your Registered Office

Companies must keep a copy of the memorandum and articles of association at their registered office or SAIL address. Remember, a company’s articles will be displayed on public record.

Companies House Must Receive Your Memorandum and Articles of Association

If you have registered your company online using Companies House Web Incorporation Service, you have to adopt the model articles by simply submitting the memorandum online. Companies House does not require a copy of the model articles.

However, if your company is registered via the Companies House paper application, you can choose either the model or bespoke articles. Both the memorandum and bespoke articles must be submitted by post (albeit the model articles needn’t be included).

How to Obtain a Copy of the Memorandum and Articles of Association

In order to receive a copy of the memorandum and articles of association, simply go to Companies House and download a copy of the articles online. Moreover, it’s a simple process for those companies that are already registered as you simply have to head over to Companies House for the same, or use the help of a quick and efficient company formations service.

Remember...

It’s crucial for business owners to know the terms and significance of important company documents and processes. At the point of forming your company, the memorandum and articles of association will be submitted to Companies House and notably, all UK companies are legally required to maintain both their memorandum and articles of association.

For more information about the memorandum or articles of association, or for expert assistance with obtaining a business address, contact Your Virtual Office London, today.

Once you register a company, advisably through a company formations agent who will comprehensively manage all necessary communication with Companies House and remedy start-up teething issues, you’ll be met with a plethora of important numbers and codes. One of these important digits will be your SIC code.

This article will explain all you need to know about this all-important code.

The Definition of a SIC Code

A SIC code is a Standard Industrial Classification code. Originating from the U.S. in the early 20th century, a SIC code is a five-digit code that is used to classify industries. SIC business codes are used for the same purpose by Companies House and the Office for National Statistics uses SIC business codes to gather important data. The ONS describes SIC codes as:

“The UK standard industrial classification of economic activities, abbreviated as UK SIC, is a 5-digit classification providing the framework for collecting and presenting a large range of statistical data according to economic activity.”

SIC business codes define and categorise the activities of a company and are the result of a continuous effort to form a comprehensive list of all existing types of businesses in the UK.

How Are Trade Groups Classified?

Presently, there are over 600 unique SIC codes. This information helps to track the number of companies operating in various industries, identify business trends, and monitor the strength of various parts of the UK economy.

Companies House website displays a condensed version of the full codes (as found at the Office for National Statistics). The SIC business codes are classified into trade groups and subsequently, full classifications are provided within every trade group.

For example:

Codes under “Section A” fall under the trade description of Agriculture, Forestry and Fishing. Within this heading you will find trades such as “Growing of rice” (SIC business code: 01120) and “Plant propagation” (SIC business code: 01300).

Where Do You Find a SIC Business Code?

The relevant SIC codes can be found by searching the condensed list of SIC codes from Companies House website — follow the link of “condensed version of the full address” above as you must use the codes on this list when filing to Companies House.

If your company is using an earlier SIC business code from the previous 2003 version of codes, you’ll need to search the SIC Conversion Table to locate the 2007 version. You must provide the new code on your next confirmation statement. Find out more about your confirmation statement and Companies House requirements here.

What Are the SIC Code Categories?

There are 21 main industry categories/groups on the condensed list of SIC codes, with a number of SIC codes within each category representing specific trade activities related to that industry. The main categories are:

Section A: Agriculture, Forestry and Fishing

Section B: Mining and Quarrying

Section C: Manufacturing

Section D: Electricity, gas, steam and air conditioning supply

Section E: Water supply, sewerage, waste management and remediation activities

Section F: Construction

Section G: Wholesale and retail trade; repair of motor vehicles and motorcycles

Section H: Transportation and storage

Section I: Accommodation and food service activities

Section J: Information and Communication

Section K: Financial and insurance activities

Section L: Real estate activities

Section M: Professional, scientific and technical activities

Section N: Administrative and support service activities

Section O: Public administration and defence; compulsory social security

Section P: Education

Section Q: Human health and social work activities

Section R: Arts, entertainment and recreation

Section S: Other service activities

Section T: Activities of households as employers; undifferentiated goods- and services- producing activities of households for own use

Section U: Activities of extraterritorial organisations and bodies

Can You Change Your SIC Business Code?

Your SIC business code can be changed if your main business and trading activities change. Simply locate the relevant SIC business code from the condensed list from Companies House (or the Conversion Table if your code precedes the 2007 list). Once retrieved from Companies House, you must add it on your next confirmation statement.

When Would You Need SIC Business Code?

The use of a SIC business code arises in the course of the Annual Return filing process. The SIC business code must be inputted in the relevant section when filing your annual return with Companies House.

Remember...

One SIC code is normally sufficient for most companies, but you may need to select up to four SIC codes to comprehensively describe the nature of your company’s business activities — this is common for companies with more specialised or unique activities.

SIC codes have to be confirmed/updated each year on the Confirmation Statement. Note: your SIC codes, along with other key company details, will be displayed on public record at Companies House.

For more information about obtaining a SIC code, or for any related assistance with setting up a company and registering a business address, contact Your Virtual Office London, today.

Before you conceive a company name, it’s imperative to check if your desired company name is available — running a search on the Companies House name availability checker will return this basic information. But your relationship with Companies House’s online checking service should not end there. Once you’ve finalised the foundations of forming a company, it’s vital that you continue to perform a company check for one very important reason:

Perform a Company Check to Analyse Your Competition

Successful sports coaches take pride in analysing their competition. A thorough analysis can determine their opponents’ strength and weaknesses, enabling coaches to adapt their tactics accordingly and achieve a positive result. As a business owner, you have to adopt a similar mind-set — perform a company check to assess your competition in order to succeed in your market.

What Company Details Can You Check?

Firstly, all companies must register with Companies House and file specific information about its activities, finances, individual board members and shareholders (learn more about the practices of Companies House).

This information is subsequently made available to the public and added to the UK register of companies via the Companies House Service (formerly known as Beta) and WebCHeck. And since Companies House stores over 170 million digital records, you’ll have access to vast, invaluable company information to help your own company grow:

• Date your company was incorporated.
• Registered office address.
• Details of your current company officers (e.g. directors and secretaries or LLP members): name, date of birth, contact address, nationality, occupation, and date of appointment.
• Details of company shareholders, guarantors, or LLP members.
• Details of People with Significant Control (PSCs): name, date of birth, contact address, and the nature of each PSCs control in the company.
• Resigned company officers.
• Details of any disqualified company directors.
• Directors’ appointments that are held in other companies
• Details of the company’s business activities.
• Any former company names.
• Annual financial accounts (also known as “statutory accounts”).
• Confirmation statement (previously known as an “annual return”).
• Statutory filing deadlines for proceeding accounts and confirmation statement.
• Mortgage charges.
• Company status (whether active, dormant, or dissolved).
• Scanned images of company documents, including the certificate of incorporation, annual accounts, confirmation statements, and change of officer details.

How Do You Apply Information Obtained From a Company Check?

Once you perform a company check, it’s important to apply your newly found knowledge in order to better your rivals. Scrutinise personal member details of your rivals and monitor the track record of those individuals regarding their performance to marketing and sales; for instance, is there a correlation between a newly appointed member and a company’s business activities/increased profits?

It’s particularly important to check your competition’s brand management. For example, researching your competition’s social media presence will definitely give you a glimpse into how their brand management works. If this is your first business, any little insight will help when it comes to managing your own brand.

Read between the lines and see what kind of style your competition is trying to exude and how they express that “reputation” to its target audience.

And since you’re sharing the market with your competitors, you don’t want to manage your brand too differently from a successful prototype (the competition), yet you still need to take advantage of any of their shortcomings in order to make your brand stand out.

How Do You Perform a Company Check?

Companies House Service was initially launched as “Companies House Beta Service” in 2015. To perform a company check using this free, simple-to-use online service, simply:

• Input the company name, unique company registration number, or name of a company officer into the search bar on the Companies House Service homepage.
• Select the name of the company or officer for which you wish to retrieve information.
• Click on any blue highlighted text for further company details.

You can also register your details through this service in order to “follow” certain companies and monitor their updates; you’ll receive free email alerts when the company files new information or amendments to any of its registered details.

How Do You Use Companies House WebCHeck Service?

The Companies House WebCHeck provides much of the free information as found on the updated Companies House Service. Additionally, the WebCHeck service can be used to view a company’s filing history and purchase copies of filed document images and company reports. This includes latest appointments of officers, mortgage statements, and additional company records.

In order to purchase these company documents and reports through WebCHeck, simply register online with an email address and password. You will then be contacted by Companies House when your requested documents are available to access and download securely.

Note: The WebCHeck service is gradually being phased out in order to be replace by a comprehensive Companies House Service.

Don’t forget, you can use the WebCHeck service to retrieve your own company information. For example, if you’ve forgotten your company registration number, simply log on and follow these steps:

• Go to http://wck2.companieshouse.gov.uk/wcframe?name=accessCompanyInfo
• Enter the name of your company in the “yellow section”
• Click the “SEARCH” button
• Your confirmation registration number will then be located on the left-hand side of your company name.

A Formations Company Can Help

Understanding how to perform company checks before you launch your own business can be very useful for your own marketing blueprint. Seeking the correct information and advice is vital for business owners who are just starting out. Using the services of a reputable formations company can help alleviate the oft-demanding administrative tasks associated with forming a company and will help you better understand how to use important platforms, such as Companies House online service.

For more information on the above, or for any related assistance, contact our friendly team and you can begin setting up your business address, today.

When you’re starting a new company, you can either form a business partnership or try growing your business alone by becoming a sole trader. If it’s not the latter, then it’s vital for you to understand the various types of business partnerships that exist in order to decide which one will be most suited to your entrepreneurial goals.

A Business Partnership Defined

Section 1 of the Partnership Act 1890 defines a partnership as: “The relation which subsists between persons carrying on a business in common with a view of profit”. At least two persons comprise a partnership and each “person” can either be an individual or another legal entity such as a limited company (classed as a “person”).

Note:When one partner ceases to exist (e.g. due to individual death/company demise), and subsequently there is no longer at least two individuals/entities in the partnership, then the partnership will automatically become dissolved. The remaining partner can then choose to become a sole trader, begin the process of limited company formation, or continue to create a new partnership. When it comes to forming the latter, it’s vital you understand the different types of business partnerships and what each of them entail, as defined below:

What Is an Ordinary Partnership?

Most business partnerships are considered to be “ordinary partnerships”. This is where a group of two or more persons carry out business duties collectively; each individual partner must act on behalf of the other partner(s) when contracts are negotiated with third parties.

Additionally, each partner is liable (jointly and separately) for any business debts. They must also, without limitation, fulfil company obligations of a partnership as a whole.

Note: If the partnership is sued, each partner can be individually pursued by a debt-recovering creditor.

Each partner is responsible for owing the other partner any fiduciary duties, including an undertaking to the following:

• Rendering accounts and full details regarding the partnership (section 28 Partnership Act 1890)
• Accounting for any personal profits gained during the course of the business partnership (section 29)
• Not competing with the business partnership without the consent of other partners; subsequently handing over any profits generated (section 30)

Many partnerships will often have a partnership agreement in place. The agreement outlines the various rights, responsibilities and duties of each partner including:

• Explanation of any bespoke split of profits
• The decision-making process
• How to follow correct procedure in case a partner leaves the company

What Are the Pros and Cons of an Ordinary Partnership?

Pros: Since an ordinary partnership is not incorporated, there are fewer administrative tasks and costs involved, such as “annual filings”. Moreover, since company accounts are not required to be published or made publicly available, your competitors won’t have immediate access to information that they could use in their favour.

Cons: Each partner is personally liable for debts incurred by the partnership. Additionally,

the partnership does not have its own legal identity and therefore cannot trade or borrow finances on its own account.

What Is a Limited Liability Partnership (LLP)?

In 2001, a Limited Liability Partnership (LLP) became a new form of legal entity introduced to the UK as per the Limited Liability Partnerships Act 2000. Essentially, LLPs are structural combinations of both ordinary partnerships and private limited companies, enjoying the advantages of both types of business partnerships.

In contrast to traditional business partnerships, an LLP is an incorporated company and considered to exist as its own legal “person”. LLPs can own assets and borrow finances independently.

As a partnership-requisite, all LLPs must also include at least two persons (known as “members”). Although there can be any number of ordinary members, LLPs require a minimum of two designated members who will hold the following responsibilities:

• Completing the VAT-registration for the partnership if the annual turnover is expected to exceed £85,000
• Appointing an auditor (if required)
• Maintaining all accounting records
• Preparing, signing and delivering annual accounts to Companies House
• Sending confirmation statements to Companies House
• Keeping Companies House up to date with necessary administrative information
• Acting on behalf of the LLP if it is wound up and dissolved

Similar to an ordinary partnership, any profits made by an LLP will be distributed to partners who in turn are responsible for paying their own personal income tax.

The incorporation process of a Limited Liability Partnership is pretty similar to that of a limited company:

• Choose a unique name that is not similar to other registered company names. It must end in “Limited Liability Partnership”/ “LLP” (or the Welsh equivalent).
• Have a registered address to which official correspondence will be sent. This needs to be an actual physical address located in the same country in which the LLP is registered. A P.O. Box may be used but still has to be followed by a physical address. (The registered address will be publicly available).
• Register the LLP electronically using third party software, or via paper/post. Use form LL IN01, or a reputable company formation agent.
• Specify at least two designated members.
• Consider forming an LLP agreement (similar to a shareholders’ agreement) outlining the desired running of the LLP.

What Are the Pros and Cons of a Limited Liability Partnership?

Pros: A major advantage of forming an LLP is that its members/partners are not personally liable for any debts incurred by the partnership. Furthermore, unlike in an ordinary partnership, fiduciary duties are generally not owed between partners, each partner owes them to the LLP.

Cons: You must disclose the details of all the important duties of running an incorporated company, such as annual filings. Additionally, all income must be disclosed.

What Is a Limited Partnership (LP)?

Limited partners (LPs) are often known as “sleeping partners” — investors who choose not to take an active part in the running of a business. At least one of the partners in an LP has to be a “general partner” (non-limited partner), meaning they have unlimited liability.

Nowadays, an LP is not a common type of business partnership, although they have been in existence since the Limited Partnerships Act of 1907. Moreover, an LP is not an incorporated company structure and has no legal status of its own.

Individual partners must maintain responsibility for entering into contracts on behalf of other partners. However, in an LP it is acceptable to designate specific partners as “limited partners” who are inactive in the management of the partnership and, importantly, have limited liability (limited to their capital contribution) for any debts incurred by the partnership.

What Are the Implications for Profit, Loss, and Tax?

Unless agreed otherwise, profits and losses are shared out equally between all partners. In an ordinary partnership (not in LLPs and LPs), all partners are jointly and severally liable for all company debts and liabilities of the respective partnership.

Each partner is responsible for paying their income tax in relation to their personal share of profits and expenses — no tax is levied upon the partnership itself.

What Is a Partnership Agreement?

A partnership/LLP agreement is highly encouraged. The agreement will outline the rules under which the partnership/LLP will operate and include issues such as:

• Capital contribution of partners and profit share
• Management of partnership and the decision-making process
• How to process and handle the exit of a partner
• Defining partner responsibilities (to both one another and to the LLP)

Remember...

When deciding to set up a partnership, you essentially have two main options: an ordinary partnership and a Limited Liability Partnership.

Additionally, it’s vital to have an agreement in place as a comprehensive and effective partnership agreement will enable the smooth running of a business and can help resolve any potential disputes. If there is no LLP agreement in place, the Limited Liability Partnerships Regulations 2001 lists “default provisions” to govern specific aspects of running an LLP.

For help with deciding between the various types of business partnerships available, or for any related assistance, contact our reputable team and launch your business address, today.

Your business idea has been conceived. A business address has been finalised. And now your business plan is put into practise. Throughout all these stages, the most important, and constant, body/organisation you’ll be dealing with is Companies House.

Companies House in a Nutshell

Quite simply, Companies House is the registry of limited companies in the UK, and operates as an executive agency of Department for Business, Energy & Industrial Strategy.

The main remit of Companies House is to incorporate/register and dissolve limited companies (this includes limited liability partnerships) in accordance with the Companies Act 2006 in England & Wales, Scotland, and Northern Ireland. This legislation governs all company registration issues in the UK.

According to their domain on GOV.UK., Companies House states the following:

           “We incorporate and dissolve limited companies. We register company information and make it available to the public.”

Companies House has the responsibility for the storage and monitoring of company information as well as existing as the platform through which to update you company’s information. Tasks such as filing annual accounts and confirmation statements are done through Companies House.

Companies House makes this information publicly available and has the power to remove non-compliant companies from the register as well as relevantly penalising company directors.

Where Is Companies House Based?

Companies House is a relatively large organisation that employs approximately 1,000 staff across its UK-wide offices.

Since the UK has three separate legal systems (England & Wales, Scotland, and Northern Ireland) Companies House houses three different registrar branches, each of which exercises its remit with companies registered in that specific jurisdiction. Notably, London houses the fourth location but serves only as a data and information unit; documents are delivered and filed here as well as search services on UK-registered limited companies.

Companies House Locations:

• Companies House Belfast Office, 2nd Floor The Linenhall, 32-38 Linenhall St, Belfast, BT2 8BG (responsible for companies registered in Northern Ireland, which are subject to Northern Irish law).
• Companies House Cardiff Office, Crown Way, Cardiff, CF14 3UZ (responsible for companies registered in England and Wales, which are subject to English Law).
• Companies House Edinburgh Office, 4th Floor, 2 Edinburgh Quay, 139 Fountainbridge, Edinburgh, EH3 9FF (responsible for companies registered in Scotland, which are subject to Scots Law).

The location of your company’s service address will determine which of the above Companies House “bases” handles your company incorporation and subsequent management of company documentation:

• If your company has a registered office address in either England or Wales, then it will be incorporated by Companies House Cardiff

• If your company has a registered office address in Scotland, then it will be incorporated by Companies House Edinburgh

• If your company has a registered office address in Northern Ireland, then it will be incorporated by Companies House Belfast

Note: UK limited companies can operate throughout, and anywhere, in the UK even if it means you practise your trade in a number of UK jurisdictions. However, a company’s registered office address has to remain in the country of incorporation throughout its lifetime.

What Company Information Is Stored at Companies House?

Company information and data is viewable and used by the public, public bodies, other companies, and government. Companies House strongly advocates a culture of corporate transparency and therefore requires regularly reliable company information on its register. It endeavours to store comprehensive company data and information to ensure this transparency is maintained.

Upon completion of your company’s registration (whether it’s directly with Companies House or with the help of a company formations team) your company must provide a number of details for the Companies House register, including:  

• Company name and registration number
• Date of company registration
• Type of company (for example, limited by shares, limited by guarantee, or limited liability partnership)
• The UK jurisdiction of company incorporation
• Your company’s registered office address
• Details of the following: directors, company secretaries, shareholders or guarantors, people with significant control (PSCs), and LLP members (including other past or present company appointments held by each individual)
• Standard Industrial Classification (SIC) codes
• Any amendments made to company details and appointments
• Annual accounts and confirmation statements
• Notices of late or missed filing of statutory documents
• Information of mortgage charges
• Information of insolvency
• Compulsory or voluntary strike-off instances
• Directors who are disqualified
• Details of any dissolved companies

The public, as well as organisations such as the police and crime agencies, as well as HMRC, utilise the above information to prevent and monitor important actions. Comprehensive statistical data is also made available by Companies House that enables the following:

• Government can determine the possible impact of policy changes and analyse the economic impact on businesses.
• Banks get an understanding of their corporate customer base.
• Businesses can research and understand their market share in order to devise appropriate marketing strategies.
• International business owners can make decisions on potential UK locations for their business.
• Help academic institutions with their curriculum and business research.
• Public service organisations can evaluate business-related policies.

Read also: Company Registration Number

What Digital Services Does Companies House Provide?

Companies House provides a number of digital services in order to manage your company online and access information. On the Government website, Companies House lists the following services, as well as a link to a customer charter that outlines the standards of services they provide:

• File documents online using the Companies House Service:

Find company information free of charge and search for disqualified directors using the Companies House Service.

• File company information online using WebFiling:

WebFiling ensures secure digital delivery of accounts, confirmation statements, notices of changes to company details, and registration of charges. Additionally, you can sign up for email reminders with WebFiling.

• Find company information online using WebCHeck:

WebCHeck enables access to company information without a need to set up an account; most documents are available as images to download and view within minutes.

• Find company information on our mobile app:

On the mobile app, you can store your most visited company searches as favourites and then organise them by various filters. Some helpful features include coloured icons to help you determine when a document is due be filed or when one is overdue.

• Download company data with our data products:

The company data product is a free monthly snapshot of information for live companies on the public register.

Remember...

With over 4 million limited companies registered in the UK and over 500,000 new companies incorporated each year, it’s vital that there is a transparent and comprehensive “centre” to access the vast amount of company information.

Companies House Service’s recent “report it now” facility enables customers to inform Companies House of any issues related to the information held on the register, as well as suspicious company activity. Since its launch, over 58,000 reports have been made and you can take comfort in the knowledge that you have a platform in which you can rectify criminal company activity, yet also ensure you keep your house in order and provide up-to-date information when required.

For more information on the above, or for any related assistance, contact our friendly team and you can begin setting up your business address, today.

While many of the businesses around the country have been studying the negative side effects of the Brexit vote and the looming lengthy discussions around the separation process, some have noticed a positive side effect. Foreign spending in British shops has increased since the vote, as buyers make the most of the currency fluctuations.

Surprising numbers

Foreign card spending volumes saw a 3.4% increase in the month after the Brexit vote was announced and non-UK card spending is particular strong online, with a growth in the volume of 5.3% while the average transaction value has increased by almost 9%. Even offline bricks and mortar stores saw an increase of around 3% after the vote.Worldpay’s UK Managing Director Dave Hobday said that the rich mix of large and independent retailers has always meant that foreign shoppers were attracted to the UK market and the recent fluctuations in the currency have also made the prospect of ‘buying British’ even more enticing.The data has given a boost to the retail sector having been through a lengthy period of uncertainty and change. This boost in overseas trade has also encourages retailers to seriously consider their e-commerce strategies and how this can let them fully make the most of the international markets now available and taking a keen interest in UK business.

More visitors

The data goes on to show that is isn’t just the volume of non-UK card transactions that have been on the rise – visitors are also spending more when they come to the UK to shop and spend money. An 8.8% increase in basket value just after the Brexit vote announcement has now been bettered by an 11% rise in in-store transactions for non-UK cards since the vote, rising from an average of £39.88 to £44.28 since the UK decided to leave the EU.The figures from online retailers show a similar trend with the Worldpay data showing an average transaction of £126.79, an increase of 10.9% on the previous year and 8.6% in the period before the June referendum.

Spreading the good news

While the biggest boost is unsurprisingly to London based businesses, the good news is that the boost has also spread around other areas of the UK too. Non-UK card transactions in the capital had increased by 4.6% and the average value had increased by 14% after the Brexit vote.Around the UK, growth has also been seen. In the Midlands, the figures were 7.4% and 5.7% respectively while the Yorkshire area saw a large 7.2% increase. Figures were more modest in Wales and Scotland did see a slight decrease in the same period.This shows that while tourist hot-spots such as London have been the biggest beneficiary of the change, all areas of the country are seeing some increase in non-UK based customers. It has prompted many businesses to look to continue their innovation and investment with the aim of attracting and getting more customers from outside the country.

Conclusion

While many businesses continue to be concerned about the impact that leaving the EU will have on their company, it seems that non-UK shoppers are already embracing everything the UK has to offer and continue to show no signs that the decision to leave the EU has in any way put them off from spending their cash here.