Starting a limited company? Be aware of these new requirements

Emily Coltman gives a brief run-through of the extra information you now need to know if you are setting up a limited company in today's climate.

If you’re planning on setting up a new limited company, there’s a multitude of things that you need to consider first, such as how much tax relief you can claim on your costs, how easily you’ll be able to attract investment and whether receiving limited liability protection is worth all of the extra paperwork and legal obligations you’ll have to deal with.

But did you know that there is also some extra information that you now need to provide to Companies House when you apply to incorporate your company?

You must give details of the company’s PSCs

Since 30th June, companies are now required to keep details of persons with significant control (PSCs) and make the information publicly available. A PSC is a person who has the right to exert significant influence, or control, over the business and management of a limited company.

Company directors must provide the following information when applying to incorporate the company:

• Assuming there is at least one PSC, the directors must disclose who the person is, stating their name, service address (where documents relating to their involvement with the company would be delivered), date of birth, and residential address. The last two pieces of information don’t go on the public record as they could put the PSC’s identity at risk of theft, but the first two items will be publicly available.
• The directors must disclose how each PSC has control, whether that is by:
• ownership of shares
• ownership of voting rights
• the right to appoint or remove a majority of the directors
• another right to exercise, or the actual exercise, of significant influence or control

Any of these methods of control may be exercised by an individual who is either operating in their own right, or acting as a representative of a firm or trust that they control, but which is not in itself a legal entity. If the firm or trust is a legal entity, such as a limited company, it would be classed as an Relevant Legal Entity (RLE) rather than a PSC.

• If a Relevant Legal Entity (RLE) has significant control over a company’s affairs, the directors need to disclose that entity’s name and address, legal form and governing law, and how it has control over the company’s affairs.
• If an Other Registrable Person (ORP), such as a government department, has significant control over a company’s affairs, the directors need to disclose that person’s name and address, legal form and governing law, and how it has control over the company’s affairs.

You must tell Companies House your company’s business activity

Since 30th June, you are required to provide at least one Standard Industry Classification (SIC) code to explain what business activity the new company will be carrying out. If the company will have more than one business activity, you must give a SIC code for each activity (you can provide a total of up to four SIC codes per company). If you can’t determine an appropriate SIC code, you must provide a written description of the company’s business activity.

Prior to 30th June 2016 directors did not have to tell Companies House what a new company would be doing and did not have to give an SIC code until they filed the company’s first annual return (which has now been replaced by a new document called the confirmation statement).

All of this means that if you are intending to form a limited company, you have to give Companies House extra information if you form that company after 30th June. These changes won’t affect sole traders or partnerships, neither of which are required to register at Companies House.

Emily Coltman is chief accountant at FreeAgent.

Further reading on registering a company

Emily Coltman

Emily Coltman

Emily is Chief Accountant at FreeAgent Central Ltd and a graduate of of the University of Cambridge.

Related Topics

Limited company

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