How to set up and run your company so Companies House and investors are happy.

This is general information, not legal advice. Companies House rules have changed significantly in recent years and continue to change, so check the current position on GOV.UK.

Why it matters

A private limited company is a separate legal person. It can own IP, sign contracts, employ people and take investment, and in normal circumstances shareholders are not personally liable for its debts. That protection depends on running the company properly. Missed filings lead to penalties and, in the worst case, the company being struck off. Messy share records slow down every funding round and sale, because an investor’s lawyer will reconstruct your history from the public register and your statutory books.

We have three checklists that list the tasks in order, so this guide focuses on understanding them rather than repeating them: before incorporation, upon incorporation and one year after incorporation.

Step by step

1. Choose the structure deliberately. Almost every venture-scale UK tech startup is a private company limited by shares. Decide the number of shares each co-founder holds before incorporating. Many tech founders issue a round number of ordinary shares (for example 10,000 or 1,000,000) at a very low nominal value, which makes later issues and option grants easier to handle.
2. Understand your articles. The articles of association are the company’s rulebook: how shares are issued and transferred, how directors make decisions and how meetings run. Most companies start on the model articles. That is fine at first, but investors will usually replace them with bespoke articles at the first priced round.
3. Get the registered office and email right. The registered office must be an appropriate address where documents will come to someone’s attention, and Companies House now requires a registered email address that it can use to contact the company. The registered office address is public; the registered email address is not, but both must be monitored.
4. Complete identity verification. Companies House has introduced identity verification for directors and people with significant control. Make sure every director and PSC has completed it and keep their verification details somewhere safe.
5. Keep the statutory registers. A company must keep registers of members (shareholders), directors and persons with significant control. Broadly, a PSC is someone who holds more than 25% of the shares or voting rights, can appoint or remove a majority of the board, or otherwise has significant influence or control. Update the registers and Companies House whenever something changes.
6. Diary the annual filings. The two recurring ones are the confirmation statement, which must be filed at least once every 12 months, and the annual accounts. For a private company, accounts are normally due nine months after the end of the financial year, with a different deadline for the first accounts. Corporation tax is filed separately with HMRC.
7. File changes promptly. New share issues, director appointments and resignations, and changes to PSCs all need filing within set time limits. Board minutes and shareholder resolutions should sit behind each one.

Director duties in plain English

The Companies Act 2006 sets out general duties for directors. In summary, a director must act within the company’s constitution, promote the success of the company for the benefit of its members as a whole, exercise independent judgement, use reasonable care, skill and diligence, avoid conflicts of interest, not accept benefits from third parties because of being a director, and declare any interest in a proposed transaction. When a company is in financial difficulty, directors must also consider the interests of creditors, and continuing to trade when there is no reasonable prospect of avoiding insolvency can create personal liability. If cash is getting tight, take advice early.

Worked example

Two co-founders incorporate Quillcraft Ltd, a Leeds-based contract analytics tool, using the model articles and 1,000 shares each. Eighteen months later an angel asks for the share register. They find that a third co-founder was promised 10% verbally, the PSC register was never updated when one co-founder’s stake changed, and the first confirmation statement was filed late. Fixing it takes three weeks and a solicitor’s time: a share issue with proper resolutions, corrected PSC filings and a short disclosure to the investor. Had they followed the upon-incorporation checklist and kept a one-page filing calendar, the round would have closed on time.

Common mistakes

• Using a co-founder’s home address as the registered office without thinking about privacy, then moving and missing post.
• Promising equity in conversation or by email instead of issuing shares or options properly.
• Treating the accountant as responsible for all filings. Directors remain responsible.
• Letting a director’s loan account drift without records.
• Changing the articles informally rather than by special resolution filed at Companies House.

What to measure

• Days until the next confirmation statement and accounts deadline.
• Whether the share register, PSC register and Companies House record match exactly, checked each quarter.
• Number of board decisions in the last quarter without a minute or written resolution behind them.