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Doing Business in United Kingdom
 
 
 

Forms of Business Organisation

Business organisations in the UK usually take one of four forms: partnership, branch, private limited company or public limited company. Private limited companies may not invite the public to subscribe for shares or bonds; public limited companies may. Public companies may choose to be quoted on the stock exchange or to be unlisted. A listing on an exchange in the EU entitles a company to be listed on any other EU exchange. Other organisational forms exist (such as limited partnerships) but are not widely used.

Most foreign-owned companies organise their affiliates as private limited companies. Those that do not, establish branches. Particular tax considerations can influence the choice. For example, operating as a subsidiary in the UK may mean that the profits of the subsidiary are subject only to UK corporation tax; operating as a branch of a non-UK company may mean that these profits (or losses) may also be taxable (or deductible) where the company resides. The tax treatment for a non-UK company varies from country to country.

The requirements of public and private limited companies are:

Capital

Public: Companies must have capital of at least £50,000, 25% of which must be paid up on each share. Capital may be supplied in non-cash forms (eg machinery, patents or know-how), but non-cash contributions must be independently valued. No legal reserves are required.

Private: Same requirements, except there is no minimum for private limited companies and non-cash contributions do not need to be independently valued.

Founders & Shareholders

Public: Public limited companies must have at least two shareholders. There are no nationality or residence requirements. Private: Same requirements, except they may have only one shareholder.

Board of Directors

Public: There must be only one board with at least two directors. There are no nationality or residence requirements. A director may be chairman. Any changes to the board must be reported to Companies House within 14 days.

Private: Same requirements, except that the minimum number of directors is one.

Management

Public: Managers need not be shareholders or directors. Every company must have a company secretary, who may be a director as long as there is more than one director. There are some qualification requirements.

Private: Same requirements, except there are no qualification requirements.


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