A-Z Glossary of Terms

Our jargon busting guide to essential company formation terms

A

Abbreviated accounts

A shorter version of annual financial accounts, containing only a balance sheet and notes to the accounts. ‘Small’ companies may send abbreviated accounts to Companies House instead of full statutory accounts.

Accounting period

The period of time covered in a Company Tax Return. Limited companies must pay corporation tax on all taxable income from that period. It will normally begin when trading starts and ends on the accounting reference date (ARD). An accounting period cannot be longer than 12 months but it can be shorter.

Accounting reference date (ARD)

The date that signifies the end of a company’s financial year and the date to which the annual accounts must be made up to. It is normally the anniversary of the last day of the month in which the company was formed. Annual accounts must be delivered to Companies House within 9 months of the accounting reference date.

Accounting standards

The legal standards that limited company statutory accounts must meet – either International Financial Reporting Standards or UK Generally Accepted Accounting Practices (GAAP).

Active

The term applied to a company that is trading and ‘active’ for corporation tax purposes.

Admin Portal

An online facility provided for our clients. It allows individual users to access and manage their company details online, and electronically update and file information with Companies House.

Allotment of shares

This is the process of issuing (creating) more shares in a private limited company after it has been incorporated. Form SH01 ‘Return of allotment of shares’ must be completed and filed with Companies House within one month of any new ones being issued.

Annual accounts

A statutory report detailing the financial activity of a company during its most recent 12-month financial year. The annual accounts must be delivered to Companies House within 9 months of the accounting reference date (ARD) and submitted to HMRC as part of the Tax Return.

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Annual return

See Confirmation Statement.

ARD

See Accounting Reference Date.

Articles of association

Sometimes referred to as ‘articles of agreement’, this is a mandatory legal document that forms the constitution of a company. The articles outline the internal structure of a company, the rules it must adhere to, how it should be managed, and the rights and duties of directors and shareholders. 'Model Articles' are the most common.

Audit

An independent review of a company’s annual accounts, carried out by an accountant or auditor. The purpose is to ensure the financial statements are true and fair, prepared in accordance with the Companies Act, and meet the required accounting standards. ‘Small’ companies may apply for audit exemption.

Audit exemption

An entitlement afforded to ‘small’ companies whereby no audit of the annual accounts is required by an independent person. To qualify for exemption, a company must meet 2 of the following requirements: an annual turnover of less than £6.5 million; assets worth less than £3.26 million; no more than 50 employees.

Auditor’s report

An independent review given to the shareholders of a company that reports on the truth and fairness of the annual accounts submitted by the company directors.

Authentication code

A six-digit alphanumeric code provided by Companies House upon the formation of a new company. The code acts as an online signature and allows secure signing into WebFiling or Software Filing and submission of information to Companies House.

Authentication details

Also known as ‘consent to act’ information. These terms refer to a combination of personal details that members use to create unique online signatures to confirm their consent to joining a company. Until 10th October 2015, company officers also had to provide authentication details. They now simply check a 'consent to act' box on the officer appointment form.

Authorised share capital

A provision contained in Section 2(5)(a) of the Companies Act 1985 that requires a limited company to restrict the total value of its issued shares to an authorised amount. Abolished by the Companies Act 2006, authorised share capital no longer applies to any company formed after October 1st 2009.

B

Balance sheet

A financial statement forming part of a company’s annual accounts. It should state all assets it owns and all liabilities it owes at a given point in time, as well as anything owing to the company. Shareholders, investors and creditors use balance sheets to review a company’s worth. Auditors will analyse the balance sheet as part of an audit of the annual accounts.

Board of directors

The collective term for the directors of a private limited company. If a company has only one director, this individual will be the sole person on the board. When certain activities or issues require attention, the directors will hold a board meeting to discuss these matters and pass resolutions.

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Board meeting

A meeting attended by some or all members of a company’s board of directors and any other permitted individuals.

Brand

The identity of a product, image or promise that is unique to a particular company. A brand is created to promote a company or product, make it stand out from its competitors, foster positive associations with consumers through clear messages and consistent delivery, and ultimately cultivate user loyalty.

Branding

The process of developing and maintaining a brand.

Brand equity

The value of a brand as perceived by consumers.

Branding strategy

A long-term plan defining the way in which a brand will be successfully communicated and delivered to consumers.

Business activity

This refers to any form of trading carried out by a company, such as: buying and selling goods, promoting the business, renting premises, accruing interest, managing investments, employing staff, providing services, and receiving income from any other source. A company that is actively trading is liable for corporation tax.

Business address

Used for receiving non-statutory business-related communication. It does not appear on public record – it is usually provided to clients, suppliers, lenders, landlords and other members of the general public to use for correspondence.

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C

Certificate of Good Standing

Issued by Companies House upon request, to certify that a company has been in continuous existence since its date of incorporation; that it has satisfied its necessary filing requirements and legal obligations; that there are no actions being taken against the company; and, it is not in the process of being struck off the company register. It’s basically a kind of reference stating the reliability and credibility of a particular company.

Certificate of Incorporation

A certificate issued to a limited company upon its incorporation. It serves as conclusive evidence of its legal existence under the Companies Act 2006.

Certificate of Incorporation on Change of Name

Also known as a Certificate of Name Change, this is an official document issued by Companies House to any limited company that changes its name after incorporation.

Chairman

A person appointed to preside over board meetings.

Company addresses
  • Registered Office – Mandatory. The official address of a limited company. It will be displayed on the public record. Companies House and HMRC will deliver statutory mail to this location.
  • Service Address – Mandatory. The official address of individual directors, secretaries, and persons of significant control (eg. shareholders who own more than 25% of the company's shares). It will be placed on the public record and used by Companies House and HMRC to deliver statutory mail to individual directors.
  • Usual Residential Address – Mandatory. The home address of directors, secretaries and persons of significant control, eg. shareholder. It remains private unless it is used as a registered office or service address.
  • SAIL Address or Single Alternative Inspection Location Address - Optional. An alternate location where company registers can be kept and made available for public inspection. It will be displayed on public record.
  • Business Address – Optional. A correspondence address for receiving non-statutory mail. This will not be displayed on public record.
  • Trading Address - Optional. The location where a company carries out its main trading activities. May or may not be the same as the registered office, service, business, or SAIL address. It will not be displayed on the public register.

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Companies Act 2006

Primary legislation applying to limited companies. The Act was fully implemented on October 1st 2009 to modernise company law in the UK, but many aspects of the Companies Act 1985 are still in place.

Companies Act 1985

Legislation concerning incorporation and governance. This act only applies to companies formed prior to October 1st 2009, before the Companies Act 2006 was brought into full effect.

Company documents

Official documents received after company registration, consisting of: the Memorandum and articles of association, a Certificate of Incorporation, and Share Certificates. These documents can be in hard-copy format or PDF files.

Company director

A person or firm appointed to manage a company at the discretion of its owners. All private limited companies must have at least one director who is a natural person aged 16 years or above. Directors are required to lawfully and conscientiously run a company for the benefit of its owners in accordance with the Companies Act 2006 and the articles of association.

Company formation

The process of legally incorporating a limited company or Limited Liability Partnership (LLP) with Companies House, which can be carried out online through a company formation agent, online via Companies House Web Incorporation Service, or by post using Companies House's paper application. Registering a company allows it to exist as a distinct legal entity that is separate from its owners and responsible for its own debts.

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Companies House

The Registrar of Companies in the United Kingdom, and an executive agency of the Department for Business, Innovation and Skills (BIS). To be legally incorporated and permitted to operate as a limited company or Limited Liability Partnership, a company must be registered with Companies House in one of the following jurisdictions: England and Wales; Scotland; Northern Ireland.

Companies House Register

Also known as the ‘register of companies’ or ‘public register’. This is the official list of all incorporated companies. It is available to the public and it contains information and details about all limited companies and LLPs.

Companies House registration number

See Company registration number.

Company incorporation

Also known as company formation or company registration, it is the process of incorporating a new or existing business as a limited company at Companies House under the provisions of the Companies Act 2006.

Company law

Company law in the UK regulates companies registered under the provisions of the Companies Act 2006. Also known as corporate law - it has 2 main areas - corporate finance and corporate governance.

Company limited by guarantee

A distinct legal entity and a type of company structure normally formed by non-profit organisations and charities. It must be owned by at least one guarantor and managed by at least one director. The personal liability of the guarantors is limited to the amounts of their guarantees, which must be paid if the company is unable to pay its bills.

Company limited by shares

A distinct legal entity that is ideal for those who want to make and distribute profit, enhance their credibility and status, and restrict the personal liability of the owners. It must be owned by at least one shareholder and managed by at least one director. The personal liability of the shareholders is limited to the value of their shares.

Company name

A unique name chosen during the incorporation process. Companies House displays all company names on public record. No two names may be the same or ‘too similar’.

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Company officers

A collective term for directors and secretaries. Company officers are appointed to lawfully run and manage a company by and on behalf of its owners.

Company register

The statutory records held by a limited company at its registered office or SAIL address. The register should contain all relevant details about a company, its officers and members, its share capital, and all other required statutory information. It must be made available for inspection.

Company registration

The process of registering a business as a limited company or Limited Liability Partnership at Companies House.

A registered company is a separate legal entity from those who own and run it. Most registered companies are limited liability companies, which means the liability of the owners are limited to the total nominal value of the shares or guarantee.

Company registration is also known as company formation or incorporation.

Company Registration Number (CRN)

Also referred to as a ‘CRN’ or ‘Companies House Registration Number', this is a unique number issued to all new companies upon incorporation. It will take the form of 8 digits, or 2 letters followed by 6 digits. A CRN is used to identify a company and it will be displayed on the Certificate of Incorporation, the public register of companies, and all statutory correspondence from Companies House.

Company shareholder

The persons owning all or part of a limited company through the purchase or acquisition of shares. The liability of shareholders is limited to the amount of shares they own. Shareholders may also be directors.

Company seal

A hand-held tool used to print or emboss a company’s name or logo on a document. It is a modern-day version of a red wax seal of authentication.

Company secretary

A person or firm appointed to assist a company director with his or her duties and responsibilities. Whilst a secretary is not a legal requirement, one can be useful for reducing the workload of the directors.

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Company stationery

This term refers to all documents and material produced by a company such as: letterheads, compliments slips, invoices, receipts, order forms, emails, websites, online material, information leaflets and booklets, catalogues, and visual advertisements. Companies are legally required to display their name and other statutory information clearly and consistently on all forms of stationery.

Company Tax Return

An annual requirement of any company that is actively trading and liable for corporation tax. A Company Tax Return must be filed with HMRC every year within 12 months of the end of a company’s corporation tax accounting period.

Confirmation date

This refers to the date by which Companies House require all the information covered by the Confirmation Statement to be confirmed. For the previous annual return form, it was referred to as the ‘made-up’ date. The confirmation date falls exactly 12 months after the confirmation date of the previous year’s statement.

Confirmation statement

The confirmation statement (Companies House form CS01) has replaced the annual return filing requirement. All limited companies and LLPs must send a confirmation statement to Companies House at least once every 12 months to verify its registered details and update certain changes (shareholder details, share capital, PSCs, SIC codes) that may have taken place since the date of company formation or the date of the previous statement.

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Consent to Act

During the company formation process or when a new director/secretary/shareholder/LLP member is appointed, the company must confirm the individual’s consent to act in his or her appointed capacity. This is done by checking a box on the relevant paper or online form. Previously, this consent was given by way of a unique authentication code, which was made up of a combination of personal details relating to the appointed individual.

Corporate director

A company or firm appointed as a director of another company. A corporate director will nominate an ‘authorised person’ to act on its behalf. To appoint a corporate director, at least one other director must be a natural person (human).

Corporate secretary

A company or firm appointed as the secretary of another company.

Corporate shareholder

A company or firm that owns shares in another company.

Corporation Tax

The tax a limited company must pay each year on all taxable income from its most recent accounting period. Corporation tax is due within 9 months and 1 day after the end of the accounting period. It must be paid electronically to HMRC.

CRN

See Company registration number.

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