The term Incorporation is used in a lot of different contexts, including the United States federal government, but it actually refers to much more than that. If you have ever been involved in a business, you are very likely to know the phrase Incorporation in the context of how a business is run. But did you also know that Incorporation can take place at different levels, including the point of government regulation? This article will explain in detail just what an Incorporation does, and how it is regulated in the UK.
It is important to remember that the incorporation process is not limited to the point of government regulation. Private members and investors can also incorporate companies, either through an agent or in their own name. For instance, if you are a private investor, you could purchase a company through a process called a ‘broker franchisee’ – this will allow you to own a company that has already been set up, in the same way that you would buy shares in a publicly traded company. A broker franchisee will then act as the ‘registered officer’ for your company and handle all the technical issues that your shareholders might be concerned with. In this way, a broker franchisee can help you set up your business on a reasonable scale, through an ‘offline’ process that avoids any form of public publicity.
There is a distinction between a company and a partnership, or even an individual proprietor and his or her own company. A company refers to the company itself, and a partnership relates specifically to the shareholdings held by the partners in the company. If there are two shareholders in a company, they will be called its ‘masters’. If there are three shareholders, they will be collectively known as its ‘owers’.
How a business incorporates itself is not a very difficult process, because it involves only one legal document. This is called the Memorandum and Articles of Association, and it sets out the details of the business involved. It is important to make sure that the document is notarized, so that it is legally binding. To do this, you will have to appoint an accountant, or a ‘registrar’, who will prepare the document according to your instructions. You should also obtain a notary, who is able to witness the notarization process.
The Memorandum; Articles of Association will include the names of the directors of the company, as well as its proposed Articles of Association, including its capital, debts, and ownership structure. The document will then detail the specific powers that each director (or proprietor) has over the company. These powers are often referred to as ‘principal’ and ‘secondary’ powers. For instance, if you have just started a new company, you may wish to include in your Memorandum and Articles of Association some ‘principal’ powers that your company will have. Other things to consider include the fact that certain types of transactions cannot be completed without the authority of a director, and that directors must be registered.
If you are starting a limited liability company, or are looking to incorporate your new business, you will want to understand how a business is incorporated. Understanding the Memorandum and Articles of Association is crucial to your understanding of how a business is incorporated. When you take action today, you can take part in the most successful proceedings of your life as a business owner, as you will be able to incorporate your business and have it successfully incorporate for you.
