Setting up a UK limited company: no frills guide (including shares calculation)

Setting up a UK limited company: no frills guide (including shares calculation)

Do you need a lawyer?

You don’t need a lawyer to register a company. This is something you can do independently.

You can complete the registration through Companies House, but first, make sure you have everything lined up as set out below.

Is the company name available?

This is your limited company name. It can be different to your trading name (i.e. your trade mark which will be explained in the next section).

All being well, the company name you’ve thought about for so long is available and you can go with it. You can check name availability on the Company House register availability checker.

If someone else already registered their company with the name you have in mind, you need to choose a different company name. You still have a trick up your sleeve though. You can use the name and register it as your trade mark if it’s available on the trade mark register (see below).

This means your company name and trade name can be different, and that is very common.

Does the trade name already exist?

To recap, the limited company name is the name with which you officially register your company and the name that will be used for official documents, while the trade mark is the name you will use to establish your company and your products/services in the market.

As mentioned above, you should check if the name you want is available as a trade mark on the UK Intellectual Property Office trade marks register.

To register the name you want as a trade mark and avoid potential conflicts with your competitors, you need to make sure that your name is not identical but also not confusingly similar to those of your competitors.

Your trade mark should also not be a potentially sensitive word, a political slant or an offensive word. To know more, check out our A quick guide to trademarks.

Is the domain name available?

You also need to ensure that the domain name that matches your trademark is available. You would be disappointed if you went through all the process of registering your company, and potentially a trademark, only to find out later that you can’t use the name in your website.

Choose your company address

Choose one address where you want to receive mail from Companies House. This can also be a home address. Just remember it will appear on the public register and all your contracts, so if you can, you might prefer an office address. It’s entirely up to you.

Standard Industrial Code (SIC)

You’ll be asked to select one or more of these standard industrial codes. Just go with whatever you think fits best. It’s just about the government collecting statistical data. Enough said!

How many shares should your company have?

The first step is to decide the total share capital of your company. The total share capital of your company is the amount you will initially pay to your company to effectively ‘buy’ the shares from it. Most companies choose £100 but you could also do £1, £10, £1,000, etc. In this case, we’ll use £100 for our example below.

Then, you have to decide the initial value (or the ‘nominal’ value) of each share and the actual number of shares you have.

Using an example of £100 share capital, you’ve got options depending on how easy it should be to transfer or issue smaller percentages of shares in future, because you can’t issue or transfer fractions of shares (i.e. there is no such thing as half a share).


Option a)

You issue 100 shares, so £100 share capital divided by 100 shares gets a share value of £1 per share. If the number of shares are divided equally between you and your co-founder, you then have 50 shares and your co-founder gets 50 shares too, each one with a nominal value of £1.

Option b)

You issue 10,000 shares, so £100 share capital divided by 10,000 shares gets a share value of £0.01 (i.e. 1p) per share. Let’s then presume that the number of shares are divided equally between you and your co-founder. So you get 5,000 shares and your co-founder gets 5,000 shares. This option is best for transferring shares freely in future. You could also do 100,000 shares of £0.001 each if you wanted to, to allow you to transfer or issue even smaller percentages in future.

In both options, the company share capital is still £100.

Option A is a standard starting point for any company, who wants to keep it simple. Don’t worry though, you can always change the number of shares in future.

Option B is more for when you are planning ahead for future fundraising or transfers of shares, and you know you want to give small percentages of your company in future, for example 0.1%.

Ultimately, the number of shares you’re going for depends on your startup long-term goals.

Do you need a co-founder agreement before you register?

You don’t need one, but you might choose to have one to agree on things up front like your shareholdings, and your commitments to the company before you register it. Our Legal Sidekick Pre-Registration Co-Founder Agreement lets you agree on your commitments for the company moving forwards, and lets you start your startup together on a strong foundation.

Join free to create your Pre-Registration Co-Founder Agreement.

Choose your company directors

Sole founder? Then the director is you.

Co-founders? Then the directors are both or all of you.

Your situation is more complicated than that? Here are some key points:

Being a shareholder and a director is not the same thing. You can be a shareholder and not a director, and you can be a director and not a shareholder. Shareholders own the company shares, so together they own the company. Directors manage the business and its day-to-day operations on behalf of the shareholders.

You can have ‘executive directors’ (e.g. the CEO) and you can have ‘non-executive directors’ (e.g. your board advisor who visits 5 times a year). When you register though, there is no distinction between executive or non-executive directors – you’re either a director or you’re not.

Note that you need at least one director and they must be over 16.

A company director is responsible for running the business day-to-day and making sure the standard company filings take place (e.g. your Confirmation Statement, which you file online each year to Companies House, which says how many shares there are in the Company and who holds them).

Directors have legal duties to keep towards the company they work for. In summary, such legal duties mean directors have to act honestly and with integrity for the business, and they cannot be underhanded in any way, take money from the company, or do anything which might harm the company.

Persons of Significant Control (PSC) Register

If anyone owns 25% of the company or more then you should put their details in when asked if you have any ‘persons of significant control’.

The government introduced this to prevent fraud and money-laundering.

Articles of Association

The Articles of Association is your company constitution, and your company rule book, covering things like share transfers and issuances and decision making processes of directors.

When registering, you get asked if you want the ‘model articles’ or to adopt your own. Most startups take the model articles at this stage, and may choose to register their own ‘bespoke’ articles of association later. Typically, bespoke articles of association aren’t a priority at this stage given everything else going on in the early stages of a business.

There is also a lot of crossover between Articles of Association and a shareholder agreement or co-founder agreement, so often companies just choose to keep the model articles, and cover their key points on how their company will operate in the co-founder agreement or shareholder agreement.

Create your co-founder agreement with Legal Sidekick in minutes.

How do you register your company?

This is guidance for people setting up limited companies, which are suitable for private and for-profit ventures.

To register your company, just click through to Company House Register and follow the instructions, cross-checking this guide as needed at each step. If you have all the information explained above in this article, the registration should take around 20 minutes.

The cost of a do-it-yourself company registration is £12.

Essential - please make sure that you keep hold of the registration details, like login details, registration numbers, authentication code, etc. These will enable you to do necessary filings in future, for example to do annual filings, issue or transfer shares, change directors and more. Keep the details stored safely.

This article was written by Simon Davies. Legal Sidekick is the platform for automated contracts and legal expertise for startups. For queries about how to register a UK company, shareholding agreements, appointment of directors and articles of associations, contact us.