Company formation documents: what each one means

Certificate of incorporation: proof of legal existence

The certificate confirms registration and contains the company’s registered name, number and incorporation date. It establishes the company’s existence but does not certify that the business is licensed, financially sound or approved for a bank account.

Your company number identifies the legal entity even if you later change its registered name. Use the correct legal details on documents and do not confuse the number with your HMRC UTR or a bank account reference.

Memorandum: the original decision to form the company

The memorandum records that the original subscribers wish to form the company and become members. For a company limited by shares, the subscribers agree to take at least one share each. The standard online process can generate it automatically.

It is an incorporation document, not a complete ongoing agreement between founders. If you need provisions about responsibilities, vesting, departure or future funding, those may need separate arrangements and tailored advice.

Articles: rules for how the company operates

The articles of association are the company’s internal rules agreed by the members. Model articles are common for straightforward private companies, but a business with multiple founders, investors or different share rights may need tailored provisions.

Read the relevant decision, share and governance provisions before relying on them. A shareholders’ agreement can complement the articles but should not be treated as a substitute for ensuring the constitutional documents are appropriate.

Statement of capital: understand the share information

For a company limited by shares, the capital statement records information about the shares, including the number, nominal value and rights. Nominal share capital is not the same as the market value of the business or the amount of cash available to spend.

Check that the ownership split and rights match your agreement. Keep evidence of money paid for shares and record later changes through the required process. Complex share arrangements can have tax consequences as well as governance effects.

Codes and identifiers are not interchangeable

The company number is public. The company authentication code enables certain filings and should be kept secure. A Companies House personal code relates to an individual’s verified identity and is supplied for relevant director or PSC requirements. The HMRC UTR identifies the company for tax purposes.

Give advisers only the access they legitimately need through a secure process. Keep documents backed up and ensure someone authorised can retrieve them if the original founder is unavailable. A printed folder can be useful, but a well-organised digital set often provides the essential records.

Worth knowing: Receiving a pack of documents is the start of maintaining corporate records, not the end.

Which document answers which practical question?

The certificate of incorporation establishes the company’s registration, number and date. A bank or customer may request it, but it is not a current ownership statement or permission to carry out regulated activity. Use current register information and company records where those questions matter.

The memorandum records the original subscribers’ agreement to form the company. It is a formation document, not a contract governing every future shareholder relationship. The articles provide the company’s constitutional rules. A shareholders’ agreement, if used, is a separate arrangement that needs to work consistently with them.

The statement of capital describes issued shares and prescribed rights at the relevant filing. A share certificate is evidence relating to a holding, but changes must also be properly reflected in the company’s records and required filings. Do not assume printing a replacement certificate alone makes a transfer or new issue effective.

Keep public constitutional documents separate from confidential credentials

Store the incorporation pack in a backed-up company folder accessible to authorised directors and advisers. Keep tax notices, company authentication codes and personal identity codes in a restricted location. A public memorandum or articles document does not justify putting private credentials in the same unrestricted shared folder.

When appointing an accountant or replacing a formation provider, agree which files and access they need. Download documents before an introductory subscription expires. Retain historic versions and label the effective date of amended articles or ownership records so you can reconstruct the position at a past date.

Review the pack rather than only collecting it. If the articles or share rights do not match the founders’ agreement, obtain advice before investment or distributions. Formation documents are the start of governance and record keeping, not evidence that future compliance has been outsourced.

Amending Your Articles of Association After Formation

While a company is legally formed with its initial constitutional documents, these are not set in stone. It is common for a growing business to need to amend its articles of association. This might be triggered by the need to create new classes of shares for an investor, change the powers or responsibilities of directors, or introduce specific rules on share transfers that were not required at the start. The default Model Articles provided by Companies House are a functional starting point, but they are generic. As your company evolves, you may find they lack the specific clauses needed to manage new, more complex situations. Amending them is a formal legal procedure that fundamentally alters the company's internal rulebook, affecting the rights of all shareholders and the authority of its directors.

The legal mechanism for changing a company's articles is prescribed by the Companies Act 2006 and requires a 'special resolution'. This is a formal decision that must be approved by shareholders representing at least 75% of the total voting rights. Once the resolution is passed, you have a strict 15-day deadline to file a copy of that resolution with Companies House, along with a complete copy of the newly amended articles. Failure to file within this timeframe is an offence and means the public record will be out of date, which can cause significant issues with banks, investors, and other third parties who rely on the register being accurate. The change only takes legal effect once these documents are correctly registered.

1. 1

   First, carefully draft the new articles of association or the specific clauses you wish to amend or insert.

2. 2

   Next, you must call a general meeting of the shareholders, providing the statutory minimum notice period unless a shorter period is agreed to by a majority of members.

3. 3

   At the meeting, formally propose the special resolution to adopt the new articles.

4. 4

   A vote must be held, and for the resolution to pass, it must be supported by members holding at least 75% of the voting rights.

5. 5

   After the vote, you must file a copy of the special resolution and a copy of the new, complete set of articles with Companies House within 15 days of the resolution being passed.

Worth knowing: Amending a company's articles is a significant legal change that requires a formal special resolution passed by a 75% shareholder majority and timely filing at Companies House.

Director and PSC Identity Verification: The New Requirement

A major change introduced by the Economic Crime and Corporate Transparency Act is mandatory identity verification for all new company directors and People with Significant Control (PSCs) appointed from 18 November 2025. This measure is designed to increase corporate transparency and combat the misuse of UK companies for illicit activities. It means individuals can no longer be appointed by simply filling in a form; they must first have their identity digitally verified or checked through an authorised agent. This makes the process of appointing a director a two-stage process: verification first, then formal appointment. This is the most significant change to the company register in a generation, aiming to make it harder for criminals to operate behind anonymous corporate structures.

The verification process is managed directly via Companies House or through authorised and supervised third-party agents, such as accountants or company formation specialists. The primary method involves a digital service where the individual uses a valid photo ID, like a passport or driving licence, and completes a 'liveness' check using their device's camera. This creates a secure and verifiable link between the living individual and their role on the public register. Failure to complete this verification will mean an appointment cannot be legally registered. The company and the individual involved could also face fines or prosecution for non-compliance. Existing directors and PSCs will also be required to verify their identity over a transitional period.

• **Who is affected?** All new and existing company directors, People with Significant Control (PSCs), and any individual who files information with Companies House.
• **Why was it introduced?** To improve the accuracy and reliability of the data on the companies register, making it harder to register fictitious individuals and increasing trust in UK corporate structures.
• **What are the consequences of non-compliance?** The director or PSC appointment will be invalid and rejected by Companies House. The company and the individual could face civil penalties or even criminal prosecution for making a false filing.
• **Is there a direct cost?** Companies House is not expected to charge a direct fee for its own verification service, but authorised third-party agents will charge for providing verification, adding an administrative cost to formations and appointments.

1. 1

   The proposed director or PSC must first choose a verification route: either directly with the Companies House digital service or through an authorised third-party agent.

2. 2

   Using the chosen service, they will need to scan or photograph a valid photo identity document, such as a passport or a photocard driving licence.

3. 3

   They will then be prompted to complete a 'liveness' check, which typically involves taking a selfie or a short video on their device to prove they are a real person present at that moment.

4. 4

   The system will then attempt to match the person's face to the photo on the identity document, and upon success, their identity is considered verified with Companies House.

5. 5

   Only after receiving confirmation of successful verification can the formal appointment be filed with Companies House on the relevant form (e.g., IN01 for a new company or AP01 for an existing one).

Worth knowing: Since 18 November 2025, all directors and PSCs must have their identity digitally verified before their appointment can be legally registered at Companies House.

The Process of Changing Share Capital: Allotment vs. Transfer

It's vital to distinguish between a share allotment and a share transfer, as they involve different procedures, documents, and consequences for the company. An allotment is the creation and issuance of brand-new shares by the company itself. This is typically done to raise new capital or to bring in new owners, such as an employee receiving share options or a new investor. When new shares are allotted, the company’s total number of shares increases, and the ownership percentage of existing shareholders is diluted. This is a corporate action undertaken by the company, governed by the authority granted to directors in the articles of association.

A share transfer, by contrast, is a private transaction between existing shareholders or between a shareholder and a new party. The company is not issuing new shares; rather, existing shares are changing hands. This does not raise capital for the company or change its total number of issued shares. The key document for this is the Stock Transfer Form, which is an agreement between the seller and the buyer. The company’s role is simply to approve the transfer (if required by the articles) and update its internal register of members. While the company doesn't receive money, the buyer may have to pay Stamp Duty to HMRC if the transaction value exceeds £1,000.

Worth knowing: Allotting shares (Form SH01) is a corporate act to create new shares for capital, while transferring shares (Stock Transfer Form) is a private sale of existing shares between individuals.

Choosing Your Share Structure: A Guide to Different Share Classes

While most small companies begin life with a single class of 'Ordinary' shares, creating different share classes offers powerful flexibility for managing control, investment, and distributing profits. A share class is simply a category of share with a specific set of rights and restrictions attached. These rights typically cover three areas: voting at meetings, entitlement to dividends, and return of capital if the company is wound up. For example, you could issue non-voting shares to children in a family business, allowing them to receive dividends without influencing decisions. Alternatively, creating 'Preference' shares can give investors priority for dividend payments, making an investment proposition more secure and attractive.

The rights for each share class must be clearly and unambiguously defined within the company's articles of association at the time they are created. A common and flexible approach is an 'alphabet' share structure, where 'A' Ordinary Shares, 'B' Ordinary Shares, and so on, are created. While they may seem identical, the articles can grant the directors discretion to declare different dividend rates for each class. This allows founders or different types of shareholders to receive different levels of dividend payments in any given year. This strategy must be used for genuine commercial reasons, as HMRC pays close attention to dividend-waiver or alphabet-share arrangements that appear to be solely for tax avoidance.

• **Ordinary Shares:** The standard type of share. They typically carry one vote per share, full rights to dividends when declared by the directors, and a right to a share of the remaining capital if the company is liquidated.
• **Preference Shares:** These usually carry a right to a fixed-rate dividend which must be paid out before any dividends are paid to ordinary shareholders. They are often non-voting and may have priority for capital return.
• **Non-Voting Shares:** As the name suggests, these shares entitle the holder to a share of profits (dividends) and capital but carry no voting rights at general meetings. They are ideal for rewarding employees or including family members in profits without giving up control.
• **Redeemable Shares:** These are shares that the company can, or must, buy back at a later date. The terms of redemption (the price and timing) are set out in the articles, providing a clear exit route for an investor or a way to buy out an employee when they leave.

Worth knowing: Using different share classes, defined in your articles, allows you to separate voting control from economic returns, which is ideal for managing investors, employees, and family interests.

Common Formation Filing Mistakes and How to Correct Them

In the rush to get a new company set up, it is easy to make simple mistakes on the incorporation application (Form IN01). These can range from minor typos in a director's date of birth to more significant errors like an incorrect share allocation or a wrong Standard Industrial Classification (SIC) code. Although Companies House's digital filing system has validation checks that prevent some errors, many can still slip through, creating an inaccurate public record from day one. An incorrect record can lead to practical problems, such as delays in opening a company bank account, failing Know Your Customer (KYC) checks, or creating confusion over legal ownership, which can jeopardise a future investment or sale.

Crucially, you cannot simply go back and edit the original incorporation application once it has been accepted. Instead, correcting the public record involves filing a separate, secondary form. The specific form required depends entirely on the nature of the error. For instance, an error in the initial shareholdings is corrected using Form RP04 (Second filing of a document previously delivered), whereas a change to a director's personal details after incorporation is done using Form CH01. For some of the most serious errors, the only remedy is a court order, highlighting the importance of accuracy. Getting it right first time saves significant administrative hassle, cost, and potential legal complications down the line.

Worth knowing: Most incorporation errors are fixed by filing a specific secondary form like an RP04 or CH01, not by editing the original application, so identifying the right form is key to correcting the public record.

A Breakdown of Mandatory Registration Costs and Timelines

The advertised cost of forming a company is only the first step in a series of mandatory or near-mandatory registrations. While the direct Companies House online incorporation fee of £100 creates the legal entity, other registrations with government bodies are required to operate legally. For instance, virtually every company processes personal data (even just of its directors or a single customer), which legally requires it to register with the Information Commissioner's Office (ICO) and pay an annual data protection fee. This starts at £52 for most small businesses. Furthermore, if you plan to hire employees, you must register with HMRC for a PAYE (Pay As You Earn) scheme before you issue their first payslip. These are not optional extras; they are legal duties with financial penalties for non-compliance.

Timing is as critical as cost. While incorporation can be completed online in minutes, other registrations have different triggers and timelines. VAT registration, for example, is mandatory once your taxable turnover hits the £90,000 threshold in any rolling 12-month period, and the application process can take several weeks. The Companies House confirmation statement is a separate annual filing to confirm the company's data is correct, costing £50 for a digital submission. This is due every year within 14 days of the anniversary of incorporation. Smart financial planning involves not only budgeting for the one-off formation fee but also for these recurring annual compliance costs to maintain the company’s good legal standing and avoid penalties.

Worth knowing: The initial £100 incorporation fee is just the beginning; a typical micro-entity should budget at least £102 in recurring annual fees for the Confirmation Statement and ICO registration.

Common questions

Official sources & further reading

This guide draws on the official guidance below. Rules, fees and individual circumstances can change; check the relevant source before acting.

• GOV.UK: Memorandum and articles
• GOV.UK: Register your company
• GOV.UK: Shareholders
• Companies House: Authentication code

General UK information, primarily for private companies limited by shares. This is not personalised legal, tax or financial advice. An accountant or solicitor can help apply the rules to your situation.