Chapter 1. Overview & Legal Foundation
1-1. The Companies Act 2006
The Companies Act 2006 (c.46) is the principal statute governing the formation, operation, and dissolution of companies in the United Kingdom. With 1,300 sections it is the longest Act ever passed by Parliament. The provisions on company formation are contained in Part 2 (sections 7–16).
Primary Source — full text of the Act:
- Companies Act 2006: https://www.legislation.gov.uk/ukpga/2006/46/contents
The Act applies uniformly across England & Wales, Scotland, and Northern Ireland, although a company is registered in one specific jurisdiction (its "registered office jurisdiction") and is subject to the courts of that jurisdiction for matters such as wind-up.
1-2. The Registrar — Companies House
Companies House is the executive agency of the Department for Business and Trade (DBT) that maintains the statutory register of companies. It operates under the authority of section 1060 of the Companies Act 2006 (functions of the registrar).
- Companies House services hub: https://www.gov.uk/government/organisations/companies-house
- Public register search: https://find-and-update.company-information.service.gov.uk/
Three offices exist for the three jurisdictions, but the central public register is unified online. A company is incorporated in the jurisdiction stated in its application for registration (Companies Act 2006, s.9(2)(b)).
1-3. The Reform Layer — Economic Crime and Corporate Transparency Act 2023
The Economic Crime and Corporate Transparency Act 2023 (ECCTA) introduced the most significant reform of the UK companies registration regime since 2006. It expanded Companies House's powers from that of a passive register to an active gatekeeper, with the following implications already in force or being phased in through 2026–2027:
- Identity verification for directors, PSCs (Persons with Significant Control), and presenters filing on behalf of companies
- Stricter rules on registered office addresses — PO Boxes and unmanned addresses no longer permitted as the registered office
- Powers to query, reject, and remove information from the register
- Increased fees to fund the new compliance regime (effective 1 February 2026)
Companies House publishes a transition timetable at: https://www.gov.uk/government/news/companies-house-fees-are-changing-from-1-february-2026
1-4. Types of Companies under the Act
Companies Act 2006, s.3 distinguishes companies by liability and s.4 by public/private status. The default and most common form, and the focus of this Bible, is the private company limited by shares ("Ltd").
| Type | Section | Liability | Share Capital | Suffix |
|---|---|---|---|---|
| Private company limited by shares | s.3(1)(a) + s.4(1) | Limited to unpaid amount on shares | Required | "Limited" / "Ltd" |
| Private company limited by guarantee | s.3(1)(b) + s.4(1) | Limited to amount guaranteed | Not required | "Limited" / "Ltd" |
| Private unlimited company | s.3(2) + s.4(1) | Unlimited | Permitted | (none) |
| Public limited company | s.4(2) | Limited (as Ltd) | Min £50,000 nominal, ¼ paid up | "public limited company" / "plc" |
Welsh-domiciled companies may use the Welsh equivalents "Cyfyngedig" / "Cyf" (s.58) and "cwmni cyfyngedig cyhoeddus" / "ccc" (s.58(2)).
1-5. Who Can Form a Company
Under Companies Act 2006, s.7(1), "a company is formed under this Act by one or more persons (a) subscribing their names to a memorandum of association (in accordance with section 8), and (b) complying with the requirements of this Act as to registration (sections 9 to 13)."
There is no nationality or residency requirement for subscribers, directors, or PSCs of a UK private limited company. A company can be formed by:
- A single individual aged 16 or over (s.157 — minimum age for a director)
- An individual resident anywhere in the world
- One or more corporate bodies (UK or overseas)
A natural person director must be at least 16 years old at the time of appointment (Companies Act 2006, s.157), and at least one director of every company must be a natural person (s.155). A company may otherwise have any number of directors, including only one.
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Quick Decision Matrix
Choose the right business structure in 5 seconds.
| Your Goal | Recommended Structure | Key Consideration | Go To |
|---|---|---|---|
| Solo founder, low risk | Sole proprietorship or single-member LLC | Simplest setup, limited liability | Chapter 3 |
| Partnership with co-founders | LLC or Limited Partnership | Operating agreement essential | Chapter 3 |
| Seeking venture capital | Corporation (C-Corp equivalent) | Investor-friendly structure | Chapter 3 |
| Small local business | LLC or local equivalent | Balance of simplicity and protection | Chapter 3 |
| Asset protection priority | LLC with strong veil | Jurisdictional differences matter | Chapter 4 |
5-second answer: Most small businesses should start with an LLC (or local equivalent). Read Chapter 2 for requirements, Chapter 3 for step-by-step setup.