Limited Liabilty - Company Formation - UK Registration Services
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The minimum cost when forming a company:
Laws governing company formation in the United Kingdom have become fairly tolerant with regards to restrictions. For example: in the 19th century, seven shareholders were required to set up a company. Today, only one shareholder is required. The United Kingdom, unlike most law systems, does not require a minimum capital limit for a small company. This makes it cheaper and easier to set up a limited liability company in the United Kingdom. The requirement can operate as a barrier to entry if set too high, and a certain degree of monopoly rent could be extracted by incumbent firms. Maintaining capital at a level that may tie up resources in under productive uses is also suggested as being a danger. A suggested alternative is mandatory insurance against third party liability. The ability by insurance companies to monitor risky activities of the insured would decide the efficiency of this solution. Economic efficiency regarding the present system for incorporating businesses in the UK is not possible to assess definitively. At present, incorporation is not difficult enough - this should be noted. This could lead to small firms being incorporated with insufficient capital. The attachment of limited liability to the corporate form means considerable regulatory costs for their owners. Undue exposure to the risks of having a relationship with an under funded and poorly managed entity is a cost to third parties. This raises the question of whether privilege to limited liability should be so accessible to small firms who will be diminished by cost increasing personal guarantees and legislation to protect the public from abuse. This double-sided approach to limited liability- dangerous incitement to abuse on one side and the utmost value and importance on the other - creates a system where the foolish or ignorant could find themselves personally liable when they thought they were protected. Discussed solutions to this problem might suggest abolishing the requirement to conduct a company audit from small and medium sized companies and thus provide a means of company formation excluding limited liability and bringing in restrictions on the share capital a company must have. It is acknowledged that the introduction of a new company form could, in practice, cause additional complexity which might outweigh the benefits of making incorporation less generally available. Further News and Articles 1. Forming A Company Just Became Easier2. Statutory Requirements For New Companies
3. Non Profit Organisations
4. Company Directors and Secretaries
5. Annual Returns6. Accounts and Accounting Reference Dates
7. Company Auditors
8. Share Capital and Prospectuses
9. Late Filing Penalties
10. The Costs and Benefits of Company Registration
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