Doing business in the UK: key features of private limited companies

This is part 2 of 7 of our guide: 'Doing business in the UK'.

Reporting requirements

Companies incorporated in the UK are obliged to file information with Companies House, the official registry of companies. A company’s incorporation and constitutional documents have to be filed, along with particulars of directors and company secretary, information regarding ownership of shares and ‘persons with significant control’ over the company , copies of security granted by the company and certain shareholder resolutions. Every year a company must file a confirmation statement confirming various details including who the shareholders and directors are, as well as audited accounts. Accounts must be filed in respect of each financial year (audited, if applicable).

All information filed at Companies House is available to the public, with some limited exceptions. The company must update Companies House whenever certain details change, for example if a new director is appointed or an existing director resigns or if new shares are issued. Failure to file documents at Companies House on time can result in penalties on the company and the directors.

Share capital

Private companies limited by shares generally have no minimum or maximum share capital requirements. The rights attaching to shares are usually set out in the company’s articles of association.

Directors’ liability

Although a company is treated as a distinct legal entity, UK law imposes personal liability on the directors of a company in a number of circumstances. Areas where such liability can arise include:

• breaches of the rules outlawing trading whilst insolvent
• breaches of statutory and fiduciary duties

but this is not an exhaustive list and liability can arise in other circumstances, for example, as a result of breaches of health and safety legislation. Individual directors are generally advised to take out insurance against liabilities, but legal advice should be taken on the extent of cover afforded by such policies. Directors should also be aware that personal criminal liability can attach to them for a range of breaches and offences committed by the company.

Role of auditors

Unless a company is exempt from audit, a company’s auditor has to prepare a report to the shareholders of the company on the company’s annual accounts including whether those accounts give a true and fair view of the state of affairs of the company as at the end of a financial year. This annual audit is designed to protect shareholders from financial misreporting.