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FAQs


We have compiled a list of frequently asked questions covering all aspects of online company formation and other business services we provide.

The list is by no means exhaustive and we hope we have answered any questions you might have but if you require further assistance please contact us by calling Freephone 0800 345 7977 to discuss your enquiry.

Dividends are payments made to shareholders of companies and are paid in accordance to the percentage of shares they own.

The directors decide if dividends will be paid out in a particular year and how much these should be, per share and is normally in line with the original business plan, agreement between directors and of course, the company’s performance.

Yes, anyone can be a shareholder, including Directors, employees and non-employees.

Shares in a private limited company can only be sold or transferred with the permission and signature of the company director(s).

There is a list of words that cannot be used for various reasons. The main ones are:

  1. Names that already appear on, or are too similar to, company names already on the Companies House Register (same or very similar to someone elses)
  2. Offensive words or names that could cause offense, owing to their nature
  3. Using the word, ‘British’ - The Secretary of State would expect the company to be British owned so it would need to be shown that the company is substantial in relation to its activity or product and it is eminent in its own field
  4. Using ‘England’, ‘English’, ‘Scotland’, ‘Scottish’, ‘Wales’, ‘Welsh’, ‘Ireland’, ‘Irish’ - The rules for using these words as a prefix for your company name are similar to the ones for the word, ‘British’. As long as the company has its main place of business in the country concerned, approval is normally given, especially if one of these words is a surname and initials are also used
  5. Using ‘European’ - Company names with this word will only normally be approved if there is a genuine and real connection with an official body and the use to implicate this is not allowed
  6. Using ‘United Kingdom’ or ‘Great Britain’ - The rules for using this word as a suffix or prefix are the same as for ‘British’. Just using ‘UK’ or ‘GB’ is normally approved without any issues

The full list of sensitive names and the reasoning behind them can be find on the Companies House website.

An annual return is an important document to Companies House and is there to record all company details, keep them updated and accurately recorded.

The information on the returns include:

  • Registered office
  • Director’s name(s) and address(es)
  • Any Company Secretary information
  • Details of current and former shareholders

The annual return must be signed and returned to Companies House by the due date.

Most forms can now be filed online and is a cheaper method of filing this and other documents.

Not sending the annual return to Companies House will result in the company being dissolved, which could have drastic effects on your trading reputation and credit score.

Shares are tokens of ownsership and the proportions of how they are distributed depends on how many shares are issued in the beginning.

If, for example, 100 shares are issued and you have two shareholders with 50 shares each, they would both be 50% shareholders.

If you issued 10 shares, one shareholder having 4 shares and the other 6, the second will have a 60% share and will be the main shareholder.

Each share has a monetary value but this does not have a true bearing of the value of the share and the share worth is normally worked out after the value of the business.

Shares can all carry the right to dividend and the shareholders may also benefit from the sale of the company.

PNG Formations regularly use our London addresses as the registered address for our clients.

This is also helpful when we are instructed as an accountant and enables us to have first hand access to any documents coming through the post. The other benefit is that you do not have to display your own home address on your corporate literature.

You need to register for VAT if your taxable turnover is over £81,000.

It may be advantageous to voluntarily register if you sell goods that are zero rated or VAT exempt, as you may be able to claim VAT back on purchases but not have to charge it on sales.

A registered office is an address that is recorded on file as somewhere that all official documents can be sent to and guaranteed to be seen by the Company Directors.

This address needs to be a physical address, should not be a PO box and should also be in the country that your company is registered in.

There are many things that you can do to make your business venture successful and ‘well run’.

Things that PNG Formations can help with include:

  1. Accountancy Services
  2. Business Consultancy

Other things that you may need include:

  1. Domain name registration - design, build and host a website promoting your products or services
  2. Business bank account - you will be required to supply your new company registration number to trade under this name
  3. Business insurance - protect your assets, buildings and also Public Liability and Professional Indemnity insurances
  4. Business plan - clearly define your business objectives, financial projections and method of achieving - this will be needed for any bank loans or ‘angel funding’

The following forms will be provided to you by the defined method within your company formation package.

  1. Shares Certificates
  2. Memorandum and articles of association
  3. Certificate of Incorporation
  4. Stock transfer form SH01
  5. Form AP01

You should keep hard copies of these forms in a safe place.

Upon receiving these forms, a Director should complete Form AP01 with their name and address and send a signed copy to Companies House within 14 days of receipt.

There are no limitations on the number of Directors, but the company must have at least one Director and it is very common for companies to have more than this amount.

Although companies will often employ the services of a professional accountant, the responsibility falls with the Directors to ensure all necessary documentation is filed with Companies House as required under the Companies Act 2006.

Directors have responsibility for the legal trading and operation of the business so it is they who carry the legal obligations of carrying out legal duties.

They will also be able to define the company policy and must sign for any changes in the company’s formation and can also decide who owns shares and what percentage.

These are called ‘Shareholders’ and will be part of a public limited company.

The requirement to have a Company Secretary is no longer necessary as a legal requirement, although companies with just one Director find it useful to have the ability to provide an additional signature on legal documentation.

Without a Company Secretary, they will just need to have the document signing witness, which may or may not be inconvenient.

Becoming or appointing a Company Director should be taken seriously and the character and experience of the person being appointed be considered.

As long as these considerations have been made, anyone can be a Company Director apart from the following conditions:

  1. The individual(s) must not be an un-discharged bankrupt (except with permission from the court)
  2. The individual(s) must not have been disqualified from a court from acting as a Company Director (without prior permission from the court to act for that company)
  3. The individual(s) must be over 16 if registering a company in Scotland

Forming a Limited company with Companies House does mean that there are certain rules you have to follow.

These are:

  1. You must have at least one Company Director
  2. You must file an Annual Return for the company and submit to Companies House annually
  3. You must have accounts made up professionally and submitted to Companies House annually
  4. You must register an office address in England or Wales. If in Scotland, you register through Companies House in Edinburgh
  5. You must keep your Company Register (information on file) up to date with any changes.

If you are a limited company, there can be many benefits such as earning your own credibility, eligibility for certain tax reliefs and protection of the trading name of your company.

Forming a limited company as opposed to just being a sole trader also protects you and your assets. This is because your liability becomes ‘limited’ and you become an employee of the company, rather than having full financial responsibility if anything goes wrong.

It is always best to speak to a professional about these things in detail once you have formed your company.

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Registered in England & Wales Company Number: 05140389
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