1. Fundamental features of the formation of a company in the UK
Public limited company (PLC)
PLCs are obligated to have two shareholders and £50,000 worth of publicly issued shares before the company can start trading (nibusinessinfo, 2020). The company must have at least two directors, with at least one being a natural person, and be registered with Companies House. Each director must be at least 16 years old, and the company must have a trained secretary. The annual return must be filed with Companies House. The company must be filing annual accounts with Companies House. Directors are obligated to notify the Companies House of any changes made to the company's management or organizational structure
Dividends are a common way for companies to return money to their shareholders after expenses and before reinvestment into the business. Companies limited by shares are required to notify HM Revenue and Customs (HMRC) of their presence and the notion that they apply to Corporation Tax if they have taxable income or profits. Once that is done, a Company Tax Return must be submitted to HMRC, along with any Corporation Tax payments due. In addition, a PLC must follow the rules set forth by HMRC concerning employer PAYE and value-added tax. The maximum loss that any one member could incur is the sum of their unpaid dividends (Hill, 2021). Members are not personally liable for the debts of the company, such as when the business takes out a loan from the bank unless they have given guarantees.
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All limited-by-guarantee companies in the United Kingdom must register with Companies House, also called the Registrar of Companies. A limited-by-guarantee company needs at least one director and one guarantor. Director and Guarantor may be the same person, or there may be more than one of each. The public will have access to all records containing information about the company's directors and guarantors (1stformations, 2021). All limited companies must provide a physical address that will serve as the registered office address in the country in which the company is incorporated. Standard Industrial Classification (SIC) codes need to be provided
The identities of the organization's People with Significant Control (PSCs) should be made public. In most cases, PSCs will act as directors and guarantors. All legally recognized businesses must have a memorandum of association and articles of association (Chouaibi et al. 2022). The memorandum includes a list of the company's founders who have signed on as guarantors and who have also agreed to establish the company and become members.
Private company limited by shares
A private limited company by shares must register with Companies House, and to do so it must have a that is not already in use by another company. The company's registered office address will be listed in official government documents. A private, limited-liability company can't be formed without at least one director and one shareholder (Salhi et al. 2020). The roles of director and shareholder can be held by the same individual. Standard Industrial Classification (SIC) codes should be used so that a comprehensive picture of the business can be highlighted. Identifying a "person of significant control" (PSC) in the company on the application is necessary
PSCs always include the company's shareholders and board of directors. Shareholders' s must be included in the “company's Memorandum of Association” (Your company formations blog, 2022). Each subscriber will be asked to sign the “company's memorandum of association” as part of the formation process. This document serves as evidence that the limited company's founding shareholders agreed to become members of the company. Even if a shareholder resigns from the company after a certain amount of time has passed, their will still appear on the public register and in the memorandum.
Private unlimited company
Similar steps are taken when forming an unlimited company as when doing so with a limited one. However, there are significant differences, such as the fact that online registration is not an option, and the paper form IN01 must be submitted to complete the process (Company Wizard, 2023). The proposed for the company must still comply with most regulations about such designations. There are no standard articles of association for an unlimited company. Once the paperwork has been submitted to and approved by Companies House, a certificate of incorporation for the new unlimited company will be issued. In the certificate, it will be stated that there are no ceilings on the company's expansion.
About 4 million limited companies operate in the United Kingdom, potentially providing full-time work for as many as 21 million people (Research Briefings, 2021). Both employers and workers are afforded some measure of protection by the various employment laws in force across the United Kingdom. Legislation covering topics like termination, holidays, pay, discrimination, and more has been enacted to protect employees' rights while also protecting employers' interests and preserving a level playing field.
Recognition of trade union bodies, the right to have a coworker present at a disciplinary hearing, and maternity and family leave are just a few of the many rights guaranteed by “the Employment Relations Act of 1999” (Citation, 2023). The Act also guarantees employees the right to take family leave.
In an effort to modernize the country's labor laws, the United Kingdom passed “the Employment Rights Act in 1996”. Contracts, unfair termination, parental leave, and protections against being laid off are all included (Khan et al. 2019).
Parental leave includes time off before, during, and after childbirth. When a child is born, a parent has certain legal protections, including time off work to care for the child. These protections are spelled out in the “Family and Medical Leave Act Amendment Regulations 1999”. Workers with children under 18 are entitled to take up to 18 weeks off work per year without pay to care for their families (Wright et al. 2019).
“The National Minimum Wage Act of 1998” mandates that businesses in the United Kingdom pay their workers a minimum wage that is adjusted for inflation every year and varies depending on the employee's age (Duggan et al. 2020). Some exceptions exist, such as in the case of employed apprentices. Workers over the age of 23 are also mandated by law to be paid the National Living Wage.
The Part-Time Workers Regulations, a law enacted in 2000, guarantees that any part-time employees who take on are afforded the same benefits and protections as regular employees. Part-time workers have a legal right to be treated fairly by their employers (Khan et al. 2019). Providing time off by the employee's actual hours worked is one such example.
The purpose of “the Transfer of Undertakings (Protection of Employment) Regulations 2006” is to protect employees' rights in the event of a change in business ownership, such as the purchase of one company by another. When a larger company purchases a smaller one, it lowers the probability of further consolidation, which can be reassuring for employees who are worried about losing their jobs (Wright et al. 2019).
The UK employment law favours employees
For long maternity leaves, employers face losses in their business while they have the fear of discrimination if they do not recruit female employees. On the other hand, the fear of a discrimination claim prevents employers from addressing poor performance (Duggan et al. 2020). The claim of unfair dismissal is also a threat for employers as there are n such boundaries in this law that clearly explain the unacceptable behaviors of employees in terms of their performance. Due to the immense facility of leaves from maternity to parental the focus of employees remains on their families rather than their jobs
This is also effective in the performance of organizations. The part-time employees of this country also receive several benefits as full-time employees which makes it difficult for employers to maintain their budget. During a period of recession, strategic alliance, or acquisition employers focus on surviving strategies. During this time also they cannot unfairly lay off employees in the UK (Wright et al. 2019). Having family-friendly policies in place is not without a hefty price tag, both in terms of resources and money. Finally, employment tribunals tend to side with workers who are unhappy on the job.
Legal protections for employees are the primary focus of employment law in the United Kingdom, despite its role in helping to regulate the larger operations of businesses throughout the country. For example, this law requires both small businesses and multinational corporations to ensure a safe workplace for their employees (Duggan et al. 2020). It's important to cite this phrase. This is why all businesses in the United Kingdom must have health and safety policies that are transparent and in line with best practices.
References
1stformations. (2021). About Companies Limited by Guarantee. https://www.1stformations.co.uk/about-companies/company-limited-by-guarantee/#:~:text=All%20companies%20limited%20by%20guarantee,be%20multiple%20directors%20and%20guarantors
Chouaibi, S., Chouaibi, J. and Rossi, M., 2022. ESG and corporate financial performance: the mediating role of green innovation: UK common law versus Germany civil law EuroMed Journal of Business, 17(1), pp.46-71.
Citation. (2023). UK Employment Laws Explained. https://www.citation.co.uk/news/hr-and-employment-law/uk-employment-laws-explained/#:~:text=UK%20employment%20laws%20are%20in,relationship%20between%20the%20two%20fair
Company wizard. (2023). What is an unlimited company?. https://www.companywizard.co.uk/blog/what-is-an-unlimited-company#:~:text=It%20must%20be%20registered%20with,be%20submitted%20to%20Companies%20House
Duggan, J., Sherman, U., Carbery, R. and McDonnell, A., 2020. Algorithmic management and app?work in the gig economy: A research agenda for employment relations and HRM Human Resource Management Journal, 30(1), pp.114-132.
Hill, I.R., 2021. Spotlight on UK artisan entrepreneurs' situated collaborations: through the lens of entrepreneurial capitals and their conversion International Journal of Entrepreneurial Behavior & Research, 27(1), pp.99-121.
Khan, N., Korac?Kakabadse, N., Skouloudis, A. and Dimopoulos, A., 2019. Diversity in the workplace: An overview of disability employment disclosures among UK firms Corporate Social Responsibility and Environmental Management, 26(1), pp.170-185.
nibusinessinfo. (2020). Legal structures for businesses - an overview. https://www.nibusinessinfo.co.uk/content/starting-public-limited-company
Research briefings. (2021). Business statistics. https://researchbriefings.files.parliament.uk/documents/SN06152/SN06152.pdf
Salhi, B., Riguen, R., Kachouri, M. and Jarboui, A., 2020. The mediating role of corporate social responsibility on the relationship between governance and tax avoidance: UK common law versus French civil law Social Responsibility Journal, 16(8), pp.1149-1168.
Wright, C.F., Wood, A.J., Trevor, J., McLaughlin, C., Huang, W., Harney, B., Geelan, T., Colfer, B., Chang, C. and Brown, W., 2019. Towards a new web of rules: An international review of institutional experimentation to strengthen employment protections Employee Relations: The International Journal, 41(2), pp.313-330.
Your company formations blog. (2022). What Is a Private Company Limited by Shares?. https://www.yourcompanyformationsblog.co.uk/what-is-a-private-company-limited-by-shares/
