Once you have had the idea for your business and secured the necessary funding you should consider incorporating as a private limited company. The company is recognised in law as having an existence that is separate from the directors and shareholders who run it. The main advantage of a private limited company is that you will not be personally liable for the company’s debts, except in certain circumstances, e.g. Wrongful Trading.
Every company must be registered at Companies House before it starts trading. The company must have at least one shareholder and director as well as a separate secretary. There is specific documentation that must be submitted to Companies House upon Incorporation.
If there is more than one shareholder it is strongly advisable to have in place a formal agreement that sets out how the company is to be run. This should include, amongst other things, provisions for dividends, sale of shares and obligations of shareholders.
Directors Service Contract
The contract of employment for a director (a Director’s Service Contract) is governed by company law and must be drafted accordingly. There are rules about salaries and dividend as well as procedures relating to shareholder approval that must be complied with.
For further information please contact our Business Team.