Public Company

Private Company

Registration

Name of Company

To include ‘public limited company' (or abbreviations) or their Welsh equivalents

To include ‘limited' (or abbreviations) or their Welsh equivalents

Memorandum

Must state the Company is to be a public company.  Must relate to Table F

Must relate to Table B

Minimum number of Members

Two

One

Minimum number of Directors

Two

One

Commencing Business

Cannot commence business until it has obtained a certificate of compliance with the minimum share capital requirements

May commence as soon as certificate of incorporation is received

Share Capital

Authorised minimum

£50,000 (minimum can be altered by statutory instrument)

None specified

Issued minimum (before trading can commence)

£50,000 of which at least one quarter (£12,500) must be fully paid up together with the whole of any premium

1 share, nil paid

Offer of shares and debentures to the public

Permitted, provided Financial Services and Markets Act 2000 rules are followed

Prohibited unless private placing to individuals certified as High Net Worth Individuals or Sophisticated Investors.  If more than 20 shareholders, should be a plc.

Allotment

Permitted only where capital is subscribed in full or offer states that shares will be allotted even if the capital is not subscribed in full

Not restricted except as above

Pre-emption rights to offer equity securities

Offer must be made to existing shareholders first, unless authority given to directors to allot shares in disregard of pre-emption rights.  This authority must be renewed at least every 5 years (in practice renewed annually by listed companies)

Not applicable if articles contain requisite renewable authority of if elective resolution to disapply pre-emption rights made and not withdrawn.

Loss of at least half of share capital (i.e. If net assets become equal to ½ or less of amount of called-up share capital)

Must call extraordinary general meeting within 28 days

No requirements to consult members

Public Company

Private Company

Notification to company of significant interests in shares

Obligation to notify interest of 3% of nominal value of total share capital or 10% of nominal value of any class of share capital

No obligation

Financial assistance for acquisition of company's own shares

Except for exceptions in S153, financial assistance is prohibited under S151

Prohibition is relaxed under S155 if company not a member of a   vertical group containing a PLC and “whitewash” procedures complied with.

Redemption or purchase of own shares out of capital

Exceptions under S153(4) only if net assets not reduced, redemption or purchase is out of distributable profits or proceeds of a fresh issue for that purpose

No restriction on exceptions to rule that no assistance be given contained in S153(4).  May redeem or purchase own shares out of capital provided procedures in S173 are complied with.

Payment for Shares

By means of an undertaking to perform work or services

Permitted provided performance within 5 years after allotment

Permitted without proviso

By subscribers to the memorandum

Cash

Cash or other consideration

Further allotments

One quarter of the nominal value plus the whole of any premium must be paid before the shares are allotted

No amount specified

Consideration is non-cash asset

Must be a contract to transfer the asset within five years

No requirement

Must be a report on the valuation of the asset by a person qualified to be auditor of the company

No requirement

Distribution of profits and assets

Distribution can be made of available profit when:

Net assets exceed share capital plus undistributable reserves (for investment companies assets must be equal to 1½ times liabilities)

Accumulated realised profits exceed accumulated realised losses

Distribution in first accounting reference period

Initial accounts to be properly prepared and audited

Initial accounts to be properly prepared but need not to be audited

Dividends based on Interim accounts because insufficient distributable reserves in last annual accounts

Interim accounts to be properly prepared and filed at Companies House (they do not need to be audited)

Interim accounts must be prepared using “reasonable judgement”

Public Company

Private Company

Transaction with directors

Loans to directors

Prohibited for amounts above £5,000.  Loans to connected persons are included in £5,000 limit

Prohibited for amounts above £5,000.  Loans to connected persons are permitted unless ‘relevant' company i.e. it is a member of a group containing a plc, banking or insurance company, or an entity regulated under the Financial Services and Markets Act 2000.

Quasi loans and credit transactions

Prohibited

Permitted unless ‘relevant' company

Exception for loans to meet company expenditure

Limit £20,000 if prior approval by ordinary resolution

No limit

Loans in ordinary course of business and loan for house purchase/improvement in ordinary course of business

Combined limit of £100,000 unless company is recognised bank

No limit

Laying and delivery of accounts

Period allowed

7 months.  An extension of 3 months can be claimed if the company carries on business, or has interests outside the United Kingdom, the Channel Islands and the Isle of Man

10 months.  An extension of 3 months can be claimed if the company carries on business, or has interests outside the United Kingdom, the Channel Islands and the Isle of Man

Accounts sent to members

Summary financial statements can be sent unless full accounts requested.

Full accounts

Entitlement to file abbreviated accounts

Cannot file

Can file if size criteria satisfied, company is not a member of group containing a plc, banking or insurance company, or entity regulated under Financial Services Act 1986, and directors' and auditors' statements made

Audit

Must be audited

Very small companies and groups can be exempt from audit under S249A

Accounts disclosure exemptions

None available.  Certain additional disclosures required.  Group accounts must be prepared.

Small Companies can take advantage of 8Sch and FRRSE disclosure exemptions.  Small and medium sized companies do not have to prepare group accounts.

Public Company

Private Company

Directors and Secretary

Company Secretary

Must be suitably qualified

No requirement for qualification, but sole director cannot also be secretary

Re-appointment of Directors at General Meeting (if applicable)

Separate resolution for each director unless unanimously resolved otherwise before motion is put

One resolution for all directors being re-appointed is permissible but still good practice to have separate resolutions

Directors' age

Appointment of a director over 70 years of age must be approved in general meeting

No requirement unless subsidiary of public company

Fair dealing by directors

Stringent provisions under CA 1985 ss311-347

Less stringent provisions unless part of a group including a plc

Miscellaneous

Proxies

Member can appoint more than one proxy but proxy cannot speak at meeting

Member can only appoint one proxy (unless Articles provide otherwise) but the proxy can speak at the meeting

Written resolutions

Not permitted

Permitted if signed by all members entitled to vote.  Cannot be used to remove directors or auditor. Otherwise have same effect as special, extraordinary or elective resolutions, but auditors must concur

Elective resolutions (which must be passed unanimously, but can be withdrawn at any member's request, and must be filed with Registrar of Companies

Cannot be used

Members may elect to

-dispense with AGM

-dispense with annual re-appointment of auditor

-dispense with laying of accounts, directors' report and auditors' report before company in general meeting

-reduce majority required for short notice of EGM to  majority of members holding 90% of shares or voting rights

-extend  indefinitely directors' authority  to allot shares

Transfer of assets (with a value of one-tenth or more of the issued share capital) to the company by members within 2 years of company being entitled to do business or of re-registration as a PLC

Transfer must be approved by members and a report on the value of the asset by a person qualified to be the auditor of the company obtained

No requirement