Costs of UK Limited Company Formation - Registration Services
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It is generally agreed that the costs relating to company formation in the UK
are low, especially when in direct comparison to civil law systems in mainland
Europe. The speed at which companies can be registered, and the services offered
by company formation services are key factors in this low price. Company registration fees were cut in the mid-1990s, in part under the influence of EU law.
Being able to register a company so quickly has its negative implications such as those received by opportunistic registrations of companies. However, there are systems in place to deal with such implications such as the courts, the Registrar of Companies and the Secretary of State for Trade and Industry. The way in which Table A is modelled as a constitution for certain companies is unclear. There is also the issue of the objects clause continuing to be drafted in a long complex way, notwithstanding the changes to the ultra views doctrine introduced by the Companies Act 1989. The bigger problem of whether incorporation is too easy or too difficult relates to the current link between corporate status and limited liability as well as the costs and benefits of incorporation. The regulatory interventions designed to offset the clear advantages of limited liability and the protection of creditors are a large part of the incorporation costs. These include the statutory audit requirement, but also the possibility, ex post, of disqualification and of personal liability for wrongful trading or breach of the common law duty of care owed to the company. Many of these potential costs are misunderstood in advance and may significantly disadvantage small business owners who incorporate compared with those who trade on an unincorporated basis. The cons of incorporation are strongly felt by those who incorporate for ‘cultural’ reasons or to take advantage of tax factors, rather than for inherent legal or economic reasons. Creditors are often at the bad side of the deal when in business with undercapitalised micro firms, and deal with more of the costs. Creditors are vulnerable due to the low entry criteria for incorporation. Success is also limited when using the safeguards designed to protect creditors from failing firms. Failure rates of micro firms can be reduced by more research and better risk assesment and management. Research into other areas such as the imposition of a minimum capital requirement or the provision of an alternative corporate form without limited liability for small businesses could help deal more effectively with the magnitude of externalities brought about by the system of limited liability. 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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