For the formation of any company, an initial step is to get the company registered. Registrar is the place where all the registrations regarding the companies are done. The Registrar of United Kingdom is the Companies House. The Registrar’s services are provided in different areas. Such as Wales, England and Scotland, each of them has a different Registrar. One may contact the Registrar relevant to the area where the company is to get registered. This article provides a guidance for the initial steps to be taken to open a company in UK.
Receivables of the Registrar
For a company intended to have a business formation UK, the Companies House must be contacted for the process of registration. The relevant documents should be prepared before the registration process starts. The documents should then be forward to the Registrar. The following documents should be sent to the Registrar:
According to Section 10 Companies Act 1985:
Consent of the Registrar
As mentioned in Section 14 of Companies Act 2006, if all the documents submitted to the Registrar are complete and according to the requirements of the registration, the Registrar will register the documents. As in the following case:
R v Registrar of Companies, ex p Bowen
A group of unregistered dentists intended to form a company named “The United Dental Service Ltd.” The unregistered dentists who were also the subscribers were refused by the Registrar for the registration of the company. The Registrar argued that as the dentists were unregistered, the word “Dental” in the title had to be changed. Another alternative solution was to mention in the memorandum that only the registered dentists will work in the company. The subscribers sought justice against the Registrar.
Lord CJ Held:
The decision was supported by AVORY J and BANKES J.
Change of rule in Companies Act 2006
The previous mentioned case held under the Companies Act of 1985. Hence, the Registrar’s powers in case of alteration of names was limited. The case gave an insight about the right given to the company for choosing a company name. Hence it may seem that to register a company name UK is an easy task.
However, changes have been made in the old version of Companies Act. According to the 2006 version the Registrar has more powers related to the names of companies. Hence, it restricts the use of “Dental” without the assent of General Dental Council (subsection 55 and 56 of Companies Act 2006). Thus, the company’s name should be carefully selected and judged per the requirements mentioned in Companies Act’s 2006 version to register a company name UK.
Rejection by Registrar
According to Section 7(2), if a company has some unlawful objective, its formation can be stopped by the Registrar. Hence, if the Registrar is rightly unsatisfied, he may reject the request for registration. For instance, the case of:
R v Registrar of Joint Stock Companies
It was a company being formed for the purpose of selling tickets of an Irish raffle. Two men decided to open a company for selling the tickets of lottery belonging to Ireland. However, at the time of registration, the Registrar refused after seeing the objective, refused for registration. The case was presented in Court of appeal.
Scrutton LJ Held:
Cancellation of Registration via Proceedings
If the Registrar passes the company in the registration and the company is successfully registered, it does not mean that the company will have objectives that are completely lawful. However, if for some reason the company has been issued certificate of incorporation, it does not remain simple to cancel its registration. The reason is that it does not remain possible to challenge the firm’s regularity on the basis of its unlawfulness. However, the cancellation of the company’s registration can be done by lawsuit.
Take into consideration the example of a case:
Bowman v Secular Society Ltd
It was a company with limited guarantee and it was registered as well. The company’s objective was that the promotion of an idea which stated that the basis for the conduct of human should be a knowledge that is not supernatural. Rather it is natural. Moreover, it also promoted the belief that all the actions are ended by the prosperity of human. The company was presented a gift of residuary estate. Nevertheless, the validity of any such gift or bequest was questioned. These beliefs were accused to be in contradiction to the beliefs of Christianity and public policies as well. House of Lords stated that the objective was not unlawful.
Lord Parker Held:
Practical drawbacks of the incorporation method
It is a mere myth that the formal procedure of registration is efficiently handling the incorporation of companies. It is tried to portray that the formation of companies is genuine and people who want to operate the company get the paper work done. They intend to work together for some lawful purpose. And send the required documents specially constituted for their specific purpose. However, the reality is quite different from what is being portrayed.
Nearly, 60% of the companies that are registered in UK are registered as such that their paper work, which includes the memorandum and objectives of the company, is done by someone who is not intending to run the company. The registration is taken as a mere way to get a readymade company. There are firms that form a collection of every type of incorporated company and sell it to customers.
Rulings regarding Trade Union
Nevertheless, the registration process allows free incorporation of random companies. But there are certain rulings that have to be followed while forming a trade union. A trade union cannot be created under the Companies Act 2006. This has been provided by section 10(3) of the Trade Union and Labour Relations Act 1992. However, if this rule is not followed, the formation of such a firm will not be considered lawful. Hence, one may not be able to form a trade union as easily and freely as other companies.
Judicial review of Registrar’s decision
The judiciary may review the decision of Registrar to incorporate any particular company. For further elaboration, consider the following case:
R v Registrar of Companies, ex p AG
Lindi St Claire
It was a limited company registered lawfully. However, the company was formed to run prostitutes’ business. The subscriber of the company were two women, one of them was a prostitute and the other was a cashier. The Registrar at first did not like the name being proposed by the subscribers. As the words “Prostitute” and “Hooker” were being used in proposed titles. However, after the change of name the Registrar granted approval for the registration of company. As the objective of the company was morally detrimental to the policies governing public conduct, Attorney General sought lawsuit for the review of the formation of company. One of the owners, who was a prostitute, of the company said that it was unjust to quash the company after it had been considered legal.
ACKNER LJ Held:
Hence the order for cancellation of registration was given.
The decision was supported by SKINNER J.
Completion of Registration Process
According to Section 13 of Companies Act 1985 the following steps should be taken after the required documents have been submitted by the company. The same rulings are provided in Companies Act 2006 under the Sections 15 and 16.
However, if someone wants to open a company in UK, he must know the rules and make sure that the people who will become the future body of corporation of the company devise the memorandum and get the registration completed. No unlawful goal should be involved in the memorandum to secure the company from any future lawsuit against it.