Learning Outcomes
After studying this article, you will be able to identify the legal and documentary requirements for incorporating a company in England and Wales, explain the main steps and filings for registration at Companies House, compare model and bespoke articles of association, and advise on liability risks for promoters—especially with respect to pre-incorporation contracts. You will also be able to recognise key post-incorporation filings and identify common exam pitfalls in formation procedures.
SQE2 Syllabus
For SQE2, you are expected to understand the legal and practical steps required to form and register a company, and to advise clients on related risks and obligations. In your revision, focus on:
- company formation by registration and how this differs from unincorporated businesses
- the mandatory documents for incorporation (IN01, memorandum, articles of association)
- the use and effect of model articles vs. bespoke articles
- the function and legal effect of a certificate of incorporation
- the legal status and post-formation formalities of shelf companies
- the role of promoters and promoter liability, including on pre-incorporation contracts
- Companies House filing requirements during and after incorporation
Test Your Knowledge
Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.
- What documents must be submitted to Companies House to validly incorporate a company?
- What is the legal risk to a promoter who signs a contract before the company is registered?
- What is the default set of rules governing a private limited company’s internal management if bespoke articles are not filed?
- What is the legal effect of a company’s certificate of incorporation?
Introduction
When a client seeks to incorporate a business as a company, strict legal procedures must be followed to achieve corporate status and limited liability. This article outlines the core legal and practical steps required to register a company in England and Wales, including the statutory documentation, process at Companies House, and critical risks for those acting before registration.
Incorporated vs. Unincorporated Businesses
A company is a separate legal “person,” only brought into existence through legal incorporation under the Companies Act 2006. In contrast, sole traders and general partnerships are unincorporated; they arise automatically and have no separate legal personality.
Key Term: incorporated business
A business formed and registered as a company or LLP, possessing its own legal personality and distinct existence from its owners.Key Term: unincorporated business
A business (such as a sole trader or general partnership) which is not a separate legal entity and is indistinguishable from its owner(s).Key Term: incorporation
The legal process by which a separate company or LLP is registered and acquires legal personality.
The Incorporation Process and Required Registration Documents
Nearly all companies in England and Wales are incorporated by registration at Companies House. The process is document-driven and must be completed before the company lawfully exists. Without registration, there is no company and no corporate limited liability.
Essential Documents and Information
To register a company by incorporation, the founders must submit to Companies House:
- Form IN01 (Application for Registration): requiring
- proposed company name and registered office address
- details of directors and secretary (if any)
- company type (private/public, limited by shares/guarantee)
- statement of initial capital/shares (if any)
- subscribers’ (first members’) details
- People with Significant Control (PSC)
- statement of liability (shares/guarantee)
- Memorandum of Association (executed by the subscribers)
- Articles of Association (unless intending to adopt the default Model Articles)
- The relevant registration fee
Key Term: Form IN01
The statutory application form for registering a company, containing key constitutional details required by law.Key Term: memorandum of association
A brief signed statement in a prescribed form demonstrating the subscribers’ intention to form a company and become its first members.Key Term: articles of association
The company’s constitutional rules, regulating how it is managed, how decisions are made, and the rights of members/directors. Companies may use standard Model Articles, modify them, or draft entirely bespoke articles.
Model Articles and Bespoke Articles of Association
A company may:
- Rely on the Model Articles provided by regulation (different versions exist for private companies limited by shares, by guarantee, or public companies); or
- Submit its own tailored or amended articles.
If no articles are filed, the relevant Model Articles automatically apply on incorporation.
Key Term: Model Articles
A standard set of articles prescribed by law, generally adopted unless the company files amended or bespoke articles on formation.
Certificate of Incorporation
Upon satisfactory receipt and review, Companies House issues a certificate of incorporation, which conclusively proves the company’s existence and legal personality from the date specified.
Key Term: certificate of incorporation
An official document issued by Companies House, confirming the company’s valid formation and legal personality; evidence of incorporation and registration.
Post-Incorporation Steps and Companies House Filings
Once the company is incorporated, it must:
- Update Companies House if the registered office or directors change
- File an annual confirmation statement and annual accounts
- Keep statutory registers (including members, directors, PSC, and (for some companies) secretaries and charges)
- Issue share certificates to new members (if a company with share capital)
Failure to comply with filing requirements can result in criminal penalties for the company and its officers.
Shelf Companies—Speed and Practical Risks
Shelf companies are pre-formed companies (often set up by professionals or agents) available for “instant” purchase. Shelf companies are seldom used now but may provide a solution if urgent incorporation is necessary. New owners must promptly file forms to update directors, PSC, registered office, and issue new shares where appropriate.
Key Term: shelf company
A pre-registered company, never traded, immediately available for purchase and customisation by a new owner.
Role of Promoters and Pre-Incorporation Contracts
Individuals who arrange the formation and registration of the company (such as founders or agents) are termed promoters. Promoters may enter into contracts purporting to bind the company before it is registered.
Key Term: promoter
A person who, by their actions, brings a company into existence, typically by arranging incorporation and conducting pre-registration business.Key Term: pre-incorporation contract
A contract made on behalf of a company before the date of its registration; at law, the purported company is not bound and the promoter(s) signing may be personally liable.
Worked Example 1.1
Samira and Chris intend to register “Sunbeam Interiors Ltd” but, to secure premises, sign a 10-year lease “for and on behalf of Sunbeam Interiors Ltd” before submitting documents to Companies House. After incorporation, the company does not occupy the premises or pay rent. The landlord seeks payment. Who is liable?
Answer:
Samira and Chris, as promoters, are personally liable on the lease signed before incorporation. The company cannot be bound by a contract made before it existed, unless the landlord (and all parties) novates the contract after incorporation. If the contract remains as originally signed, only the promoters can be sued.
Promoter Liability: Risks and Solutions
Promoters are always at risk of personal liability for pre-incorporation contracts unless:
- The contract is expressly conditional on successful registration,
- The company is later joined as a party through a novation (all parties consent), or
- The contract is replaced after incorporation.
If not, promoters will be personally liable—even if they sign “for and on behalf of” the intended company.
Filing Obligations and Ongoing Compliance
Post-incorporation, Companies House filings must be made for any changes to:
- Directors or secretaries
- Registered office address
- Shareholders or persons with significant control
- Share capital or issued shares
- Company name or articles
Delays or inaccuracies can result in criminal liability for the company and the responsible officers.
Exam Warning
Missing, incomplete, or incorrect registration documents will delay or invalidate a company’s incorporation. Before filing, check all statutory requirements and confirmations, including PSC information, are fully satisfied.
Worked Example 1.2
Grace is instructed to incorporate a private company for a client. She files Form IN01 with full details, intending to provide the articles of association “in the next few days.” What happens?
Answer:
Companies House will not register the company until all statutory documents are received, including articles or confirmation that the Model Articles are to apply. Partial filings are insufficient for incorporation.
Key Point Checklist
This article has covered the following key knowledge points:
- The difference between incorporated and unincorporated businesses, and why registration is required for corporate status
- The mandatory documents and information (IN01, memorandum, articles) filed with Companies House to register a company
- The effect and use of Model Articles as default rules unless bespoke articles are filed
- The legal effect and evidentiary value of a certificate of incorporation
- Risks, function, and customisation of shelf companies
- Promoter liability on pre-incorporation contracts and how to manage it in practice
- Core Companies House filing obligations during and after incorporation
- The practical importance of accuracy and completeness in all registrations and filings
Key Terms and Concepts
- incorporated business
- unincorporated business
- incorporation
- Form IN01
- memorandum of association
- articles of association
- Model Articles
- certificate of incorporation
- shelf company
- promoter
- pre-incorporation contract