Buying a company 'off the shelf'
If time is an important factor, you can consider buying a ready-made company. The exact procedure will depend on the company formation agents, including online agents, involved and Companies House. Typically, where a company formation agent is engaged, the procedure is as follows:
Purchasing the company
Formation agents usually have a number of companies recently incorporated. They will provide a list of names for you to make a reservation from. If required, at the time of purchase the formation agents will prepare special resolutions for changing the name and main objects, and arrange for them to be sent to the Registrar of Companies.
You will need to provide the agents with the following:
- The relevant form for naming a replacement director The relevant form for stating the location of the replacement registered office
- Payment of the amount of the formation agents' invoice
The formation agents will then provide some or all of the following items:
- A certificate of incorporation (including change of name where relevant)
- A copy of the change of objects resolution (if any)
- A certificate of non-trading (up to the date of reservation of the company)
- The resignations of the original director and secretary
- Transfers in blank of the subscribers' shares
- Suggested minutes for the directors' meeting, a change of accounting reference date form and the form for the return of allotments of shares
- Copies of the articles of association - these determine a number of aspects of company conduct especially between shareholders.
- The combined register and minute book (in loose leaf or bound format) with share certificates
Attending to post-incorporation matters
First meeting of the directors
When you receive the Certificate of Incorporation, you should convene the first meeting of the directors to deal with the following matters:
- Appointing (if appropriate) a chairperson, managing director, and any other directors, and approving any employment contracts
- Appointing auditors (if appropriate)
- Approving for registration (subject to stamping) stock transfer forms transferring the subscribers' shares to the intended members of the company and, if appropriate, allotting further shares and issuing share certificates
- Approving banking arrangements, including agreeing authorised signatories in respect of the company's bank account and passing the resolutions required by the bank
- Approving any business contracts
- Disclosing any director's interests in contracts made with the company
- Disclosing in writing any director's interests in shares or debentures of the company and associated companies
- Altering the registered office of the company
- Adopting an accounting reference date
- Convening a general meeting (if required)
First general meeting
A first general meeting of the company will be required to approve
- Any substantial property transaction between the company and any of its directors
- Any directors' service contracts for terms exceeding five years
After the first board and general meetings, you should make the following online returns to the Registrar of Companies:
- Return of allotments of shares form
- Notice of appointment of director form, signed by any new appointees
- Change of accounting reference date form if necessary. Failure to notify a change will result in the company's accounting reference date becoming the anniversary of the end of the month of incorporation
- Notice of change in situation of registered office form, if a further change has taken place
In special circumstances, the following online returns may also have to be made:
- Notice of increase in nominal capital, and a copy of the resolution authorising the increase
- A copy of any new or altered Memorandum or Articles, and special resolutions passed
- Notice of place where copies of directors' service contracts or memoranda thereof are kept) (UK companies only)
- Notice of place where register of directors' interests in shares etc. is kept) where appropriate (UK companies only)
- Any stock transfer forms in respect of the subscribers' shares should be produced for stamping
- Minutes of the first board and general meetings should be prepared
- The company should issue share certificates. (If the shares are fully paid up, distinguishing numbers may be dispensed with)
- The company's statutory books should be written up
- Shareholders should pay their share capital into the company's bank account
- Consider proposing elective resolutions to dispense with the need for annual general meetings and the laying of accounts and reports before a general meeting
- Consider using written resolutions in place of general meetings
- Don't forget to register for PAYE and VAT, if appropriate
- Notify HMRC when trade commences. Three months are permitted after which a penalty applies
A company must not register a transfer of shares or debentures unless:
- A proper instrument of transfer, stamped with the appropriate duty, has been delivered to the company; or
- The right to the shares has been transmitted by operation of law (e.g. where they are inherited on the death of the holder)
Stamp duty on transfers of shares is usually payable by the purchaser and is at the rate of 0.5% where the cost of shares is £1,000 or more, unless reliefs or exemptions apply.
Form of transfer
Transfers must usually be in writing in any form approved by the directors. It is normal to use a Stock Transfer Form.
The transferor is deemed to remain the holder of the shares until the name of the transferee is entered in the Register of Members.
Transfers by companies and other corporate bodies should normally be executed under their common seal (although this is no longer a strict legal requirement).
Normally the stock transfer form is signed only by the transferor. However, if the shares are nil or only partly paid, the transferee must sign as well to signify acceptance of liability to meet the unpaid amount on the shares.
After a transfer has been registered, the company should be sure to retain the old share certificate and the transfer form, unless there is authority in the Articles to destroy them after a specific period.
The new share certificates should be ready for delivery within two months from the date the transfer is lodged with the company, unless:
- The terms on which the shares were issued provide otherwise, or
- The transfer is to a stock exchange nominee (for which no share certificate is needed)
Call us for help or advice on this subject, particularly around the forms that need to be filled in and submitted at each stage.