Why company formation applications are rejected
Forming a limited company in the UK is a straightforward process however there are occasions when a company formation application will be rejected by Companies House.
In this article we take a look at some of the most common reasons why applications are occasionally turned down.
Incorrect company names
Companies House set specific rules and regulations as to what is, and what is not, allowed with respect to a company name. If the name of your company is deemed to fall foul of any of these conditions the application will be rejected. For example:
- A company name must not be a duplication of one that already exists or be considered ‘the same’ in a trivial manner (e.g. the name only differs by the use of punctuation).
- A company name must not be offensive
- A company name must not suggest a connection with Her Majesty’s Government or a devolved administration, a local authority or certain specified public authorities.
- If the company’s name includes a sensitive word or expression, certain tests have to be satisfied or a statement of support provided.
For some further assistance on company names have a look at Companies House’s Guidance on Choosing a Company Name. Our top 5 tips article on choosing a company name also contains some key things for you to consider before you make your choice while it's also worth looking at the company name options made available by Government rule changes in 2015.
Registered Office Address
All companies in the UK must have a registered office address which is a physical location in the UK. It can be your business address but it doesn’t have to be. It can be any address that you choose to receive official letters and legal notices addressed to the company. Lightwork Business for example offers a prestigious central London 'registered office' address you can use.
Most importantly though the registered office address cannot be in a different country to the one in which your company will be registered. For example, if you set up a limited company in England and Wales the registered office must also be in England and Wales. You could not use an address in Scotland or Northern Ireland.
Section 243 of the Companies Act
Until October 2009 the residential address of company directors and company secretaries were publicly available at Companies House. Since that time directors have had the choice of providing a ‘service address’ if they want to prevent their residential address from being accessible by the public.
Even in the case however where a service address is used, a director’s residential address is still made available to credit reference agencies and certain public authorities. Although disclosure to those public authorities cannot be changed, section 243 of the 2006 Companies Act provides that directors who consider themselves or their family members to be at risk of violence and intimidation due to the nature of their business, can apply for their residential addresses to be protected from disclosure to credit reference agencies.
The box relating to this exemption is located within the director’s section of the IN01 Application to register a company and can only be ticked if you have obtained a formal exemption from Companies House. If you have not made an application under section 243, and therefore do not have this exemption, do not tick this box otherwise your company application will be rejected.
A new system introduced by Companies House in June 2014 added another reason why company formation applications can be rejected. This new rule now provides that a company registration application cannot include a director who is an ‘undischarged bankrupt’. In other words one of the directors of the company cannot be going through the bankruptcy process.
A person stops being an ‘undischarged bankrupt’ once they are ‘discharged’ by the court from their debts. These days, this usually happens automatically 12 months after the bankruptcy order was made, unless there’s a good reason for it not to.
Being familiar with the most common reasons why company formation applications are rejected is an important element in ensuring your limited company gets registered without any problems.
But don’t worry too much. The good news is there is no limitation on the number of times an application can be re-submitted and no extra charge for re-submitting your application. And if you apply using Lightwork Business we’ll help with your application to make sure there are no reasons why it will be rejected.
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