Starting a new limited company

elliep_2

My husband and I are starting a new business and want to protect ourselves and our house in case the company get sued or just doesn't work. We've decided to go down the route of limited company and have forms 10 and 12 from companies house. I understand that we need a 'memorandum of association' and an 'article of association'.

Is there somewhere free we can get these from? Or can we write our own? All the ones I've found online are really expensive, and as a seasoned moneysaver I can't bear to pay out £50 for 2 forms unless it's really worth it?

Debt_Free_Chick

The Memorandum & Articles set out what the company will do and how it will regulate its business. You don't really want to get these wrong as they dictate the operation of the company.

You can DIY, but it won't be easy - see point 6 of of this publication from Companies House

Probably worth paying £50 if you can get them for that.

Roobarb73

google "company formation agents" - you should be able to find a company who will sell you an off the shelf company - ie they have a load of companies registered and then you buy one, they change the name, their directors resign and your own are assumed, and any part of the memo and articles that need changed (they're generally drafted with very vague memo and "Table A" articles)

It's not expensive, although probably more than £50, but at least should ensure your company is properly constituted.

Roobarb73

PS - if your motivation to constitute your business this way is to protect your house if the business goes bust then it may not work. While it is true that the company is a separate legal entity from its directors it is also often the case that banks will require the directors to sign personal guarantees over their own personal assets before lending money to the company - and they might indeed be more inclined to do that in the current economic climate.

elliep_2

Thank you for the point about the banks asking for personal guarantees. We are aware of that and are prepared to put in some of our own money to the company to start it up. We just want to make sure it can't suddenly grab more than we were prepared to put in if it all goes wrong!

alunharford

It cost me 28 quid. If you didn't use a formation company, it's one of those things that it's probably best to get a lawyer (or somebody you can sue if it all goes horribly wrong) to do.

elliep_2

Alun, did you use a formation company then? If not how did you do it to get it that cheap?

LittleVoice

You can use Table A or whatever of the Companies Act for the Articles of Association. Chose what is appropriate. You can read the Act (and save a pdf) for free - try the BERR site as was.

alunharford

elliep wrote: »

Alun, did you use a formation company then? If not how did you do it to get it that cheap?

Yes, I used a formation company. This one I think. I have no relationship with them except having (I think) used their services to form a limited company. I had no problems. I'm sure there are others that are good too.

I got their 'bronze' package + physical certificate of incorporation (although with hindsight I suspect the physical certificate was unnecessary)

inmypocketnottheirs

£50to £100 will get you a compnay incorporated by a formation agent with a properley drafted set of memo and arts. Is it really moneysaving to try and save this cost in setting up a business. There is a massive difference between being MS and penny wise and pound foolish. An incorrect set of memo and arts could well cost you more in the long term, especially in the inconvenience of not having them drafted correctly.

A limited company will not afford any protection, if personal guarantees are signed, or if the company continues to trade if insolvent. There are a number of scenarios where directors can be held personally responsible for debts of a limited company.

It is always worth getting proper paid for legal advice in these matters. The only good advice is paid advice. However, the difficult thing is finding a good accountant or solicitor. This is best done by referral, and then by meeting at least three or four before making a decision.

Mike-H_3

http://forums.moneysavingexpert.com/showthread.html?t=1234627&page=5

This link will get you a discount code - MSE10 to use at my company site www.simpleformations.com at a cost of less than £25 inc all fees and VAT. If you do not choose to use our site, no problem. If forming a limited company is right for you then I urge you to use a reputable company formation agent. It will save you time and money. They should supply-
Certificate of incorporation
Memorandum of Association
Articles of Association
A basic set of Combined Company Registers (Statutory Books)
Share Certificates
That is the basic requirement and is pretty much all you need.

If you need any advice give any of the team a call for free advice.