Almost 10% of online company formation applications, and around half of postal incorporation applications, are rejected at Companies House. Many of the causes of rejected applications are simple mistakes that can be easily avoided. Below, we will take a look at some of the key problem areas to be aware of.
The Companies Act 2006 and secondary legislation set out certain company name rules and regulations that must be followed. Failure to do so can lead to your incorporation application being automatically rejected at Companies House. Some of the most common company name issues include:
Sensitive and offensive words
Companies House maintains a list of sensitive words and expressions that require approval of the Secretary of State before being used in a company name or business name. This rule is designed to ensure that certain names do not mislead or harm the public by:
- suggesting business pre-eminence, a particular status, or a specific function, e.g., names that include ‘British’, ‘Institute’ or ‘Tribunal’
- implying a connection with the UK government, a devolved administration, or a local or specified public authority
- including a word that represents a regulated activity
- including a word that suggests criminal activity
Any company that wishes to use a sensitive word in its name must provide information intended to support the proposed name, such as a letter or email of non-objection from a specified body, along with their registration. Reasons that an application may be rejected at Companies House because of a ‘sensitive’ word include:
- failure to supplying a letter of non-objection or supporting evidence
- the sensitive word is concealed within a name (e.g., Kingsbury Limited or Wholesalenurse Ltd – where ‘king’ and ‘nurse’ are on the list) and supporting evidence/a letter of non-objection has not been included in the application
- letter of non-objection for use of the sensitive word is not accurate, e.g., the non-objection evidence pertains to a different name, or it has been obtained from the wrong government department or body
- where applicable, the company’s articles of association have not been changed to reflect the sensitive name requirements (e.g., to use the word ‘association’ the company should have a ‘one member, one-vote’ clause and a non-profit distribution clause)
- a word used in the name is offensive (e.g., it’s racist or discriminatory) or implies a criminal connection
The word ‘Limited’
Almost all private limited companies are required to add ‘Limited’ or ‘Ltd’ (or ‘Cyfyngedig’ and ‘Cyf’ for Welsh companies) at the end of their names. Companies can claim exemption from this rule if they are a registered charity or limited by guarantee with articles of association that meet the requirements. See our separate blog for more information on exemption from using the word ‘limited’ in a company name
‘Same as’ and ‘too like’ names
If you try to register a company name that is the same as one belonging to existing company on the register, your application will be automatically rejected at Companies House.
Even if the name is slightly different, if may still be rejected if it is deemed ‘too like’ another company name on the register. Certain words such as “the” or “UK” are considered to be ‘invisible’ for purposes of similarity. So, “The Green Hammock Company Ltd” and “Green Hammock Company UK Ltd” are considered the same.
However, you can claim exemption from this rule if the incumbent registered company provides a letter confirming that it has no objection to your company being registered with a ‘same as’ or ‘too like’ name.
Only characters specified by Schedule 1 the Company, Limited Liability Partnership and Business (Names and Trading Disclosures) Regulations 2015 may be used in company names. This excludes, for example, the heart symbol.
Company officers’ details
Initials instead of full names
Full names of directors and company secretaries – including any middle names – should be used in the application. If initials (e.g. Johnny B. Goode) or abbreviated names are used, this could lead to the application being rejected.
If a commercial address (e.g., a business park or trading address) is provided as the home address of a company director, it will be rejected. The officer’s usual residential address must be supplied.
The residential address of a company director must also match their country of residence.
Section 243 exemption
Directors who do not wish to disclose their residential address (e.g. due to the risk of violence or intimidation) can apply to Companies House for exemption. However, it is vital that any director applying for Section 243 exemption to restrict the disclosure of certain information provides supporting evidence with the incorporation application, otherwise it will be rejected at Companies House.
Pursuant to section 157 of the Companies Act 2006, directors must be at least 16 age.
All companies must have at least one ‘natural’ (human) director, as opposed to only corporate directors (i.e., other companies or firms. If you do not include details of any natural directors on the incorporation application, it will be rejected at Companies House.
A limited by shares company must issue at least one share. If you do not, your application will be rejected.
All shares issued upon incorporation must be whole – they cannot be split into percentages and shared between more than one person. For example, if three shareholders are stated on the application form, you must issue at least one whole share to each shareholder.
Details regarding your company’s registered office address must be accurate, otherwise the application may be rejected at Companies House. Common errors include:
- a registered office address that is situated in a different jurisdiction from the jurisdiction of incorporation stated on the application (e.g., the company is to be registered in England & Wales, but the registered office address is situated in Scotland)
- providing a registered office address that is situated outside the UK
- not completing the town/city field, or entering the country in the town field
Disparity between Prescribed Particulars and articles of association
Prescribed Particulars are the rights attached to each class of share. These details are required as part of the Statement of Capital, which must be included in the company formation application. The Prescribed Particulars are set out in s.3 of the Companies (Shares and Share Capital) Order 2009 as follows:
- particulars of any voting rights attached to the shares, including rights that arise only in certain circumstances;
- particulars of any rights attached to the shares, as respects dividends, to participate in a distribution;
- particulars of any rights attached to the shares, as respects capital, to participate in a distribution (including on winding up); and
- whether the shares are to be redeemed or are liable to be redeemed at the option of the company or the shareholder
The Prescribed Particulars must match the details provided in the company’s articles of association, otherwise, the application form may be rejected at Companies House.
Companies House will also reject Statements of Capital if full information is not provided, or where reference is made to another document for information on share rights, for example, using the following types of wording:
- ‘please see the articles of association for the rights’
- ‘rights as set out in the articles’
- ‘share rights are the same as those already in issue’
- ‘not applicable’
- ‘pari passu’
Additional causes of applications being rejected at Companies House
Other mistakes that often cause application to be rejected at Companies House include:
- Missing fields – if certain parts of the application form have been left blank
- Missing PSC – companies and LLPs must maintain a register of People with Significant Control (PSC register). Anyone is considered a Person with Significant Control (PSC) if they: have more than 25% of shares in the company; have more than 25% of voting rights in the company; or have the right to appoint or remove the majority of the board of directors. PSCs must be declared upon company formation
- Repeat appointment – if someone appoints themselves to the same role twice on the application form
To minimise the risk of making mistakes that could lead to your application form being rejected at Companies House, check company formation application thoroughly before it is submitted.