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Reminders for Directors

  • One person can form a Ltd company.
  • Directors are to provide service address to Companies House for public record instead of residential address.
  • Service address can be the company registered office or other address as long as mails from Companies House can reach the directors.

HM_Revenue_and_Customs

UK Tax Authority - HM Revenue and Customs

  • Companies are required to register for VAT if annual sales exceeded £68,000.
  • Companies are required to register for PAYE if directors are drawing salaries and maintain payroll records.
  • HM Revenue and Customs will issue £100 penalty if companies failed to file corporation tax returns on time.
 
Business Quiz - See what your score
1. When must a limited company, with accounting period starting on 1 May 2008, file its statutory accounts to Companies House ?
 
6 months after the end of the relevant accounting reference period
9 months after the end of the relevant accounting reference period
10 months after the end of the relevant accounting reference period
Submit
 
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Special rules for public companies

 

Trading as public limited companies must follow the following rules. These special rules do not apply to private limited companies.

Payment for share capital

a) The original subscribers to a public company's memorandum are required to pay cash for their shares,

(b) At least 25% of the nominal value and the whole of any premium on shares in a public company must be paid on allotment,

(c) A public company cannot accept an undertaking to do work or perform services as consideration for the allotment of shares.

(d) A public company can accept the transfer of assets to the company as full or part (subject to the 25% limit) payment for the allotment of shares but any undertaking lo transfer those assets to the company must be performed within five years of the allotment. In addition, the company must take steps to satisfy itself that the value of the assets transferred to the company is accurate by obtaining an expert's valuation and report.

Pre-emption rights on the allotment of shares

A public company must include the statutory pre-emption rights by a provision in its memorandum or articles. However, a public company (like a private company) can prevent the pre-emption rights applying by giving the directors the authority to allot shares in accordance with Section 80 of Companies Act 1985.

Maintenance of capital

The doctors of a public company are obliged to convene an extraordinary general meeting if the company 's net assets are 50% or less of its called up share capital. The meeting must be convened within 28 days of one of the directors becoming aware of this fact and it must be held within 56 days. Obviously, the purpose of the meeting is for the problem to be considered but the governing provision section 142 of Companies Act 1985 does not require the directors to take any definite steps to remedy the position.

Purchase by a public company of its own shares

Public companies, like private companies, can buy back their own shares and issue redeemable shares. However, public companies cannot (unlike private companies) use capital to purchase or redeem shares; a public company can only use its profits for these purposes, in addition, the tax rules which, if the various conditions are complied with, allow the shareholder whose shares have been bought by the company to treat the purchase as a disposal for capital gains tax purposes, rather than the receipt of a distribution attracting income tax liability, only apply to the shares in unquoted companies. It should, however, be remembered that a public company will not necessarily have a listing on the Stock Exchange.

Financial assistance for the acquisition of shares and loans to directors

The rules prohibiting companies from providing financial assistance for the purchase of their own shares are more stringent in the case of public companies than in the case of private companies. You may refer to section 151 and 155 to 158 of Companies Act 1985 for more details. Similarly, the rules dealing with loans to directors are more stringent in the case of loans to directors of public companies as laid down by section 330 of Companies Act 1985.

Distribution of profits

In addition to the general rules restricting the funds from which companies can make distributions, public companies are only permitted to make a distribution if their net assets are not, as a result of the distribution, reduced below the combined total of their called up share capital and 'undistributed reserves.

Accounting requirements

The provisions which permit 'small' and 'medium sized' companies to file less detailed accounts with the Registrar of Companies do not apply to public companies. They also cannot qualify as 'dormant' companies (which would lead them to be able to dispense with auditors).

Age of directors

A public company may not appoint a person aged 70 and above to be a director unless the appointment is approved by the company in general meeting, fallowing special notice (giving the age of the director) of such resolution. When a director of a public company reaches the age of 70, he must retire unless the company in general meeting votes to retain him. Again, special notice must be given of any such resolution.

Written resolutions

Section 381A of Companies Act 1985, under which the members of private limited companies can take decisions by written resolutions rather than passing resolutions at general meetings, does not apply to public companies.

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