It is often asked at what stage of a business incorporation are the company objects defined. In situations where a company is being registered for a defined purpose or to conduct a specific trade, customers frequently request that the memorandum and articles of association state those distinct objects.
By doing this their customers, suppliers and perhaps most importantly their investors can view the company’s objects immediately following the business incorporation and reassure themselves that the purpose for which the enterprise exists is as they have been advised.
The issue is that the Companies Act 2006 inherently purports that every UK business incorporation for companies limited by shares is a general trading vehicle, capable of carrying out any activity which has been deemed legal.
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In order the satisfy a requirement that information be provided on a company’s objects the persons conducting the business incorporation can take the one of the following courses of action.
The first option would be to deviate from the prescribed Companies Act 2006 model articles of association and submit a bespoke set of documents at the company formation stage.
These amended articles could of course include provisions defining the specific company objects and perhaps exclude others activities either on an individually named or global, all-encompassing basis.
The preparers of these modified documents would have to exercise high levels of diligence to ensure that the finished versions were still compliant with the Companies Act and thereby acceptable to ensure the business incorporation was successful.
A secondary method of ensuring the company’s objects were viewable to enquiring third parties would be to create and then tender altered articles of association immediately following the business incorporation.
Whilst this method might be more cumbersome than incorporating the company with the correct documents, it might be preferred in situations where registering the company is an urgent matter. An example of this scenario might be in the case of persons wanting to set up a company using a specific name which might soon become unavailable.
It could thus be determined that a successful registration of the name is of paramount importance and the statement of the objects can occur subsequent to the company formation.
A third and perhaps most popular method of indicating what a company’s activities are and therefore by association, what its objects are, is during the filing of the business’ annual return.
When completing a company annual return is it mandatory to articulate the activity or areas of business the company operates in. This process is accomplished through the use of SIC codes which are pre-determined reference numbers representing varying fields of industrial and commercial activity.
Whilst some SIC codes are of a general nature and not as exacting as actually stating the specific objects of the company, they can act as a guide as to what manner of enterprise the business is engaged in.
Of the three options listed, the preferred method would probably lean towards submitting altered documents at the time of the business incorporation which contain the company objects.
This guarantees that the information is presented at the inception of the company’s existence and avoids confusion normally evident when a company has several versions of its articles of association listed against it Companies House records.