4 stages of Company Formation in UK

Wondering about the stages involved to form a company? New company formation in the UK is segregated into four different stages in UK: promotion stage, incorporation stage, capital subscription stage, and commencement of business stage. These four stages of company formation in the UK comprise different types and levels of activities required to be done to form the company in the UK. 

Let's understand a bit about the formation of the company before learning about the stages involved in the formation of the company in the UK.

Formation of the company in the UK is the process of registering a limited company with the Companies House. It requires aspiring company owners to fill the company formation application form via the company online medium, or by post in the registered office, or via a company formation agent. As per company law, the company registration process takes around 3 to 6 hours.

After the formation, the limited company attains a distinct legal identity and operates the entire process as an independent entity separate from the company owners, controlling its share of work and further planning, operating and making decisions on its own.

We have enlisted below:

Stages of the Formation of Company in the UK

The whole process is in bite-sized chunks for a simple and comprehensible read.

I. Promotion Stage:

The promotion stage of the company formation process is the first step towards a legal establishment of a business. Without this, entering into other stages doesn't make any sense or solve any purpose. There is a reason why the stages are set in a particular sequence. This is because each process is followed by the other into a chain of sequence necessary for the formation of the company.

This is a phase where the idea (seed) of the company is first formed, and a blueprint is created after measuring the feasibility and profitability of the business in terms of its competition, competitors, market conditions, technological challenges, and so on and so forth.

Furthermore, this stage involves planning for the operations, development and growth of the new company, followed by meticulous levels of documentation done for ongoing and future reference purposes.

Hence, this is the foundation stage for any private or public formation of the company.

II. Incorporation or Registration Stage: 

n this particular stage, the incorporation or registration of a company in the Companies House is undergone. The registration of a company means a legal establishment of the business under the Companies Act. 

It involves a series of documentation and filling up a variety of forms pertaining to the incorporation or registration of the company under a legal binding. Online corporation services can help a great deal regarding this process. Among many, company owners must obtain these documents before proceeding with the application enlisted below for your reference.

• The company name is a must

• The registered office address is mandatory

• Company directors information needed

• Company shareholders information required

• Mention at least one shareholder's name

• Articles of Association

• Memorandum of Association

Some of the activities include: getting a certificate of incorporation and filing the document with the registrar, to name a few. 

III.  Capital Subscription Stage:

Capital subscription is the third and one of the most critical stages in the formation of the company: both private companies and public companies. This stage is only applicable in the case of a public company that has the capital (shares).

Going through this stage for any organisation is necessary before the company operations begin.

After the company's registration, businesses proceed to fetch money through the allotment of share capital to members. These shares are allotted to key signatories holding important company documents who have agreed to subscribe to the limited allotted number of shares.

Thereafter, a private company begins its business while public limited companies avail the Certificate of Commencement of Business from the Registrar of Companies.

IV. Commencement of Business Stage:

Commencement of Business is the final stage in the formation process. Here a public company must obtain the certificate of commencement of business from the registrar of companies to proceed further with the business operation.

The documents required for this purpose are:

• Declaration of shares

• Declaration of the Director's payment for shares in cash

• Director's declaration of compliance regarding the above documents

All the four stages mentioned above are crucial to forming the private company limited in the UK in the Companies House. Each stage has its role to play in the formation. The documentation process is an essential aspect of the process. The company owners should adhere to all the rules under the Companies Act and make proper submissions as instructed by the Government of the United Kingdom.

I hope this bite-sized piece helped you understand the four different stages of limited company formation in the UK. For further information, you can visit UK's official government website.