SGS 4: Incorporate from scratch v Shelf Company
What are the formality advantages for a shelf company?
- Already been incorporated so no onerous registration requirements
What sort of company would prefer incorporating from a shelf company?
- A simple company - A company that wishes to start trading immediately
What are the time advantages of incorporating from scratch?
- Able to do it online within a matter of hours which makes the process quick - No further alterations will be needed in the future such as changing directors, name etc
What are the time advantages of using a shelf company?
- Do not need to be within the Company House opening hours therefore could buy outside of hours - The company will be readily incorporated therefore it can enter into contracts with third parties almost immediately
What are the cost disadvantages of incorporating from scratch?
- Even if the company is relatively simple and uses MA then there would still be significant legal fees required to incorporate - The more complex the company, the greater the legal fees will be
What are the formality advantages of incorporating from scratch?
- Everything will be tailored to the client's needs from scratch therefore will be no need to comply with other requirements in the Act to change names, directors etc after - If adopting MA then incorporation is very straight forward
What the are the time disadvantages of incorporating from scratch?
- Incorporating a company is limited to Company House opening hours which might not be ideal where there is an emergency - If you need there to be an immediate registration then you must pay a fee of £100 - Paper based application could take 5 days - Cannot start functioning as a proper company (entering into contracts etc) into properly incorporated which can slow the process down
What sort of companies would chose to incorporate from scratch?
- Investment companies - Complex companies which require highly tailored articles
What are the cost disadvantages of a shelf company?
- Still would need to incur a fee to make all necessary changes - Legal fees may be just as much as an new company if significant changes need to be made
What are the time disadvantages of a shelf company?
- Will still need to apply to the registrar to make basic changes to the company such as name, address etc - Depending on the complexity of the company, may need to make significant changes to the company which can take time
What are the formality disadvantages for a shelf company?
- Would need to comply with formalities required for change of name, change of registered address etc such as resolutions, statute requirements
What are the cost advantages of a shelf company?
Cheaper to acquire from the outset
What are the formality disadvantages of incorporating from scratch?
No of registration documents which need to be filed (s 9 CA) such as memorandum, IN01 form, registration fee - Must contain a statement of capital and inital shareholdings (s 10) - Must contain the articles of association (s 11)
What is the third way of incorporating a company?
Outsource to an incorporation agent
What is a shelf company?
This is a dormant company which has already been incorporated which your client can purchase and amend
What is meant by incorporating from scratch?
This is where a company is set up and registered from the start
What are the cost advantages of incorporating from scratch?
£12 set up fee online £40 set up fee for a paper application No additional fees in changing officers, name etc
