FORMING A COMPANY IN ENGLAND & WALES
Relevant Law
Companies Act 1985
Companies Act 1985
WHAT IS A COMPANY?
A Company is an independent legal body with its own legal identity which stands of its own right and is created by incorporation at Companies House. Think of it as having its own personality. On incorporation, the Company gets its own identity, complete with a Company registration number. Since it has its own legal identity a Company can, in its own name, undertake such activities as buying property, entering into contracts, and litigation in the Company name. The profits, losses, assets and liabilities belong to the Company.
So, in short, if you have a company then its another ‘person’ in your business, with its own rights, responsibilities and needs. When directors and shareholders fall out and want to go their separate ways the closure of the limited company or the release of a director or shareholder has to be dealt with formally and properly or problems occur. Where a company has a couple of directors and shareholders who want to go their separate ways the use of shareholders and directors service agreements make the process clear and easy and lots of legal fees can be saved, if you set up the company without these documents in place then consider getting them now. It will save time, cash and heartache if things do not pan out. Costly legal fees to resolve these issues when things go rocky can be very difficult when the company is at the point of closure, sort them out well in advance and get your house in order from the start. Much cheaper and easier than when the individuals involved are not happy with each other, as often occurs when a decision is made to close the company.
Don’t let your company be an uncomfortable third party preventing you from moving on, get things tied up securely today and get all the documents in place so if a problem occurs in the future you have a clean track for what happens to follow without the need for lawyers and arguments getting in the way at great cost.