Setting Up a Limited Company: What Companies House Won’t Tell You (Articles, Share Structure, Founders’ Agreements)

Written by Fraz Butt, Senior Director · SRA-regulated · Last reviewed 4 November 2026

But here’s what I find myself explaining to business startup clients again and again: Companies House registers your company. It doesn’t advise you on it. The form asks what your share structure is. It doesn’t ask whether it makes sense, it gives you a set of standard articles by default and it doesn’t tell you what those articles leave out.

A lot of the disputes I deal with between business partners go back to decisions (or non-decisions) made in that first afternoon. Two founders split the shares 50/50 because it felt fair. Nobody thought about what happens if one of them leaves after six months. The website was built by one founder before the company existed, and nobody ever transferred it across.

So this guide isn’t another “how to fill in the form” article. GOV.UK and the formation agents already do that well. Instead, I want to walk you through the things the form doesn’t cover: your articles of association, your share structure and your founders’ or shareholders’ agreement. These are the decisions that actually protect you.

Quick summary: Registering a limited company with Companies House is quick and costs £100 online. Since 18 November 2025, every director must verify their identity before the company can be incorporated. Most new companies adopt the government’s model articles, which are fine for a sole founder but leave big gaps for co-founders: no deadlock solution, no leaver provisions, no right of first refusal on shares. A shareholders’ agreement fills those gaps, and the best time to put one in place is on day one.

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The Basics: What You Need to Register a Limited Company

Let’s get the mechanics out of the way first, because a few things have changed recently and many clients have asked me about them.

To register a private company limited by shares, you’ll need:

• A company name that isn’t the same as (or too similar to) an existing one, and doesn’t use sensitive words without permission
• A registered office address in the UK, in the same jurisdiction as the company (England and Wales, Scotland or Northern Ireland)
• A registered email address, which Companies House uses to contact you. It isn’t published, but you have to keep it monitored
• At least one director who is an individual, aged 16 or over
• At least one shareholder (they can be the same person as the director)
• Details of any people with significant control (PSCs), usually anyone holding more than 25% of the shares or votes
• A SIC code describing what the business does
• A statement of capital: how many shares, of what class, and their nominal value
• Articles of association: either the model articles or your own bespoke version
• A statement of lawful purpose, confirming the company is being formed for a lawful purpose

What it costs

From 1 February 2026, the Companies House fee for registering online went up from £50 to £100. Paper applications now cost £124, and the same-day service (available through software filing) costs £156. The annual confirmation statement fee also went up to £50. Full details are in Companies House’s incorporation and names guidance.

Identity verification: the new hurdle

This is the change that catches people out most at the moment. Since 18 November 2025, identity verification has been a compulsory part of incorporation. Every proposed director must verify their identity (either through GOV.UK One Login or via an authorised agent) and get a Companies House personal code before the company can be registered. That code then goes into the incorporation application.

In practice, this means you can’t set up a company on behalf of a co-founder who hasn’t done their verification yet. If one of your directors lives overseas or doesn’t have standard photo ID, build in extra time. The Companies House announcement explains how it works.

If you already run a company, the 12-month transition period for existing directors and PSCs ends on 18 November 2026, so if you haven’t verified yet, please don’t leave it any later.

The registered office: a privacy point

Your registered office address goes on the public register. So does each director’s correspondence (service) address. Since March 2024, the registered office also has to be an “appropriate address”, meaning somewhere that documents will actually come to the attention of someone acting for the company. A PO box won’t do. GOV.UK has a short page on the rules for registered office and email addresses.

I always ask clients who work from home whether they really want their home address on a public register for the next twenty years. Using your accountant’s or solicitor’s address, or a registered office service, is often the better choice.

That’s the form. Now for the part Companies House won’t help you with.

Part 1: Your Articles of Association (and What the Model Articles Leave Out)

What are articles of association?

Your articles are the company’s rulebook. They govern how decisions are made, how directors are appointed, how meetings work, and how shares can be issued and transferred. They’re a public document, filed at Companies House, and they bind the company and every shareholder.

When you register online, you’ll almost certainly adopt the model articles: a standard set published by the government under the Companies (Model Articles) Regulations 2008. Most formation agents use them too, sometimes with small tweaks.

Are the model articles good enough?

Here’s my honest view. If you’re a sole founder, the only shareholder and the only director, the model articles are generally fine. They’re short, they work, and you can always change them later by special resolution.

But the moment you have two or more founders, or you’re planning to bring in investors or give shares to employees, the model articles start to show their gaps. They were written as a neutral default, not to protect anyone in particular. Here are the gaps I see cause the most trouble.

1. No right of first refusal on share transfers

Under the model articles, there’s no requirement for a shareholder who wants to sell to offer their shares to the existing shareholders first. The directors have a discretion to refuse to register a transfer, but that’s a blunt tool, and it doesn’t give you the right to buy those shares yourself. Most co-founders assume they’d get first dibs. Under the model articles, they don’t.

2. Nothing on what happens when a founder leaves

This is the big one. If your co-founder walks away after three months, they keep their shares. All of them. Forever. The model articles contain no “leaver” provisions requiring a departing founder to sell their shares back. I’ve seen businesses where someone who left in year one still owns half the company in year five, while the remaining founder has done all the work. It’s one of the most painful conversations I have with clients.

3. Nothing on death or incapacity

If a shareholder dies, their shares pass to whoever inherits under their will or the intestacy rules. That could mean you end up in business with your late co-founder’s spouse, children or anyone else they left their estate to. Nothing in the model articles gives the surviving shareholders a right to buy those shares.

4. Deadlock

The model articles give the chair of the board a casting vote at directors’ meetings if votes are tied. That sounds helpful, but think about what it means for two equal founders: whoever is appointed chair can effectively decide every tied board vote. And at shareholder level, there’s no casting vote at all. A 50/50 split at a general meeting simply produces a stalemate.

5. Director removal

Shareholders holding more than 50% of the votes can remove a director by ordinary resolution under section 168 of the Companies Act 2006, whatever the articles say. If you’re a 40% shareholder and a director, the majority can remove you from the board. Bespoke articles (for example, with weighted voting rights on a removal resolution) or a shareholders’ agreement can give a minority founder some protection here. The model articles don’t.

Can I change the articles later?

Yes, by special resolution, which needs 75% of the votes. That’s fine when everyone is getting along. The problem is that people usually only realise they need different articles once there’s already a disagreement, and by then, getting 75% to agree may be impossible. That’s why I always encourage clients to get this right at the start.

Part 2: Your Share Structure

The incorporation form asks you how many shares to issue and at what value. Most people type in “100 shares at £1 each” (or just “1 share”) without a second thought. But your share structure decides who controls the company, who gets paid dividends, and how easy it will be to bring in new people later.

Number of shares and nominal value

There’s no “right” number, but a few practical points:

• Issue enough shares to allow for flexibility. If you issue just one share, you can’t easily give a co-founder 10% without issuing more. Starting with 100 or 1,000 shares makes the maths simpler.
• Keep the nominal value low. Shareholders are liable to pay the nominal value of their shares. A nominal value of £0.01 or £0.001 per share is common and keeps this liability small, which is helpful later when issuing shares to employees or investors.
• Make sure the shares are actually paid for. If shares are issued as unpaid, the shareholder remains liable for that amount if the company later needs it, for example in an insolvency.

Why percentages matter more than you think

These thresholds come up on almost every company I advise, so they’re worth knowing:

I’m not saying 50/50 is wrong. Plenty of successful businesses are owned equally. But if you go 50/50, you must think about how a deadlock will be broken, because the law won’t do it for you. Our article on breaking the deadlock in shareholders’ disputes explains what happens when it isn’t planned for.

Different classes of shares

You don’t have to issue just one class of ordinary shares. Depending on your plans, you might consider:

• Voting and non-voting shares: useful if you want to share profits with someone (an employee or family member, for example) without giving them a say in running the company
• Separate classes for different shareholders (sometimes called “alphabet shares”): these allow dividends to be declared on one class but not another
• Preference shares: often used where an investor wants a priority return

A word of caution: alphabet shares and dividend planning between family members are areas HMRC looks at closely. Take tax advice before setting these up, not after.

One thing to watch on future share issues

Under the Companies Act 2006, existing shareholders generally have a statutory right of pre-emption: new shares must first be offered to them in proportion to their holdings. That protects you from being diluted without your knowledge. It can be disapplied, and investors often ask for it to be, so check carefully before agreeing to a change.

Part 3: The Founders’ Agreement (or Shareholders’ Agreement)

If I could give every co-founder just one piece of advice, it would be this: put a shareholders’ agreement in place before you need it.

What is a shareholders’ agreement?

A shareholders’ agreement is a private contract between the shareholders (and often the company). It sits alongside the articles and deals with the issues the articles don’t cover, or that you’d rather not put on a public register. When it’s signed at the very start of a business, people sometimes call it a founders’ agreement, but legally it’s the same thing.

Unlike the articles, a shareholders’ agreement is confidential. And unlike the articles, which can be changed by 75% of the votes, a shareholders’ agreement can usually only be changed with everyone’s consent. That gives minority shareholders a level of protection the articles alone can’t.

What should a founders’ agreement cover?

Every business is different, but these are the points I’d expect to discuss with almost every set of co-founders:

• Roles and commitment: who’s doing what, and is everyone expected to work full-time?
• Vesting: should founders earn their shares over time (for example, over three or four years) so someone who leaves early doesn’t keep the full stake?
• Good leaver and bad leaver provisions: if a founder leaves, must they sell their shares back, and at what price? A “good leaver” (leaving through ill health, say) might get market value. A “bad leaver” (leaving to join a competitor, or dismissed for misconduct) might only get what they paid
• Reserved matters: key decisions that need the agreement of all, or a specified majority of, shareholders, such as borrowing above a set limit, selling the business, issuing new shares or taking on a major contract
• Deadlock resolution: what happens if you can’t agree? Options range from mediation through to a “shotgun” clause, where one shareholder names a price and the other must either buy or sell at it
• Pre-emption on transfers: a right of first refusal before shares can be sold to an outsider
• Death and incapacity: options for the remaining shareholders to buy the shares, often backed by shareholder protection insurance
• Drag-along and tag-along rights: so a majority can deliver a whole-company sale, and a minority can’t be left behind on worse terms
• Intellectual property: confirming that anything the founders created for the business belongs to the company
• Restrictive covenants: no competing, no poaching clients or staff, for a reasonable period
• Dividend policy and funding: how profits are distributed, and who puts in more money if it’s needed

We’ve written a full guide to shareholder agreements and why most business partners don’t have one, which goes into more detail on each of these.

The IP point nobody thinks about

I want to single this one out because it comes up so often. If one founder designed the logo, built the website, wrote the code or developed the recipe before the company was incorporated, that founder probably still owns it personally. The company doesn’t automatically get the rights just because it now exists.

That’s usually fine while everyone is friendly. It becomes a serious problem if that founder leaves, if you’re raising investment, or if you’re selling the business. Any buyer’s due diligence will ask who owns the IP, and “the founder, informally” isn’t a good answer. (If you’re curious what that process looks like, our guide to share purchase agreements explains what buyers look for.) A simple IP assignment from each founder to the company, signed at the start, avoids all of this.

“We’re friends, we don’t need one”

I hear this a lot, and I understand it. Nobody starting a business wants to plan for falling out. But a shareholders’ agreement isn’t a sign of mistrust. It’s a way of agreeing the rules while everyone is still on good terms and thinking clearly. In my experience, the founders who have one rarely end up needing it in a dispute, precisely because the expectations were clear from the start.

The cost of putting an agreement in place at the beginning is a fraction of the cost of a shareholder dispute later. I’d much rather spend a couple of hours with you now than help you untangle a deadlock in three years’ time.

Other Things to Sort Out in Your First Few Weeks

Registration is just the start. Here are the other things I’d add to your list:

• Register for Corporation Tax. If you used the GOV.UK online service, this usually happens as part of incorporation. Otherwise, you need to register with HMRC within three months of starting to do business.
• Open a business bank account. Keep the company’s money separate from your own. It’s a legal entity in its own right.
• Understand your duties as a director. Limited liability protects shareholders, but directors have legal duties under the Companies Act 2006, and breaching them can lead to personal liability. Our guide to directors’ personal liability explains what the law actually requires of you.
• Keep your statutory registers. Register of members, register of directors, PSC register and so on. These must be kept up to date.
• Diarise your filing deadlines. The first accounts and confirmation statement come round faster than you’d expect, and late filing penalties are automatic.
• Put the right documents in place. Beyond the shareholders’ agreement, think about employment contracts, terms and conditions and a director’s service agreement. Our article on the top five company documents every business owner needs is a good place to start.

A Quick Checklist Before You Hit “Submit”

If you remember nothing else from this guide, run through these questions before you register:

1. Have all the directors verified their identity and got their personal codes?
2. Am I happy for this registered office address to be public?
3. Have we thought about the share split, and what happens if it’s 50/50?
4. Have we issued enough shares at a low enough nominal value to give us flexibility later?
5. Are the model articles really right for us, or do we need bespoke articles?
6. Have we agreed what happens if one of us leaves, falls ill or dies?
7. Does the company own the IP that the founders created?
8. Do we have a shareholders’ agreement ready to sign on day one?

If you answered “no” or “not sure” to any of questions 3 to 8, it’s worth having a conversation with a solicitor before, or very shortly after, you incorporate.

How Saracens Can Help

Formation websites are great at what they do: getting your company on the register quickly and cheaply. What they don’t do is sit down with you and your co-founders and ask the awkward “what if?” questions. That’s where I come in.

Whether you’re setting up a new company or you’ve already registered and realised you need to tighten things up, I can help you:

• Decide on a share structure that fits your plans, including different share classes
• Draft bespoke articles of association, or review the model articles you’ve adopted
• Prepare a founders’ or shareholders’ agreement tailored to your business
• Put IP assignments in place from founders to the company
• Prepare director service agreements and other key company documents
• Advise on bringing in investors, employees or new shareholders later on

At Saracens Solicitors, our corporate and commercial team advises start-ups, growing businesses and established companies across the UK and internationally. To talk through your new company, call our London office on 020 3588 3500 or request a call back.

Frequently Asked Questions / Questions & Answers

How much does it cost to register a limited company in the UK? Since 1 February 2026, the Companies House fee to register a limited company online is £100. Paper applications cost £124, and the same-day service through software filing costs £156. Formation agents and solicitors charge their own fees on top for additional services.

How long does it take to register a limited company? Online applications are usually processed within 24 hours, although it can take longer if Companies House needs to check information. Allow extra time for every director to complete identity verification first, as the company can’t be registered without each director’s personal code.

Do I need to verify my identity to set up a company? Yes. Since 18 November 2025, every proposed director must verify their identity with Companies House, either through GOV.UK One Login or an authorised agent, and provide their personal code in the incorporation application.

What are model articles of association? Model articles are a standard set of company rules published by the government. They apply automatically if a company doesn’t adopt its own articles. They work well for a company with one owner, but don’t include protections such as leaver provisions, a right of first refusal on share transfers or deadlock resolution, which are usually important when there’s more than one founder.

Can I use my home address as my registered office? You can, as long as it’s an appropriate address in the same UK jurisdiction as the company. However, the registered office appears on the public register, so many people prefer to use an accountant’s, solicitor’s or registered office service address to keep their home address private.

How many shares should a new limited company issue? There’s no legal minimum beyond one share. In practice, issuing 100 or 1,000 shares with a low nominal value, such as £0.01 each, gives flexibility to divide ownership between founders and bring in new shareholders later.

What’s the difference between articles of association and a shareholders’ agreement Articles of association are the company’s public constitution, filed at Companies House, and can be changed by a 75% majority. A shareholders’ agreement is a private contract between the shareholders, usually only changeable with everyone’s consent. It covers matters such as leavers, deadlock, reserved decisions and restrictive covenants.

Is a founders’ agreement legally binding? Yes. A properly drafted founders’ or shareholders’ agreement is a legally binding contract between the people who sign it. It should be consistent with the company’s articles, so the two documents are usually prepared together.

What happens if a co-founder leaves and there’s no shareholders’ agreement? Under the model articles, a departing founder keeps their shares unless they agree to sell them. Without leaver provisions, the remaining founders can’t force a sale, which can leave an inactive person owning a significant part of the business indefinitely.

Do I need a solicitor to set up a limited company? No. You can register a limited company yourself online. But if there’s more than one founder, or you plan to bring in investors, it’s worth taking legal advice on your articles, share structure and shareholders’ agreement. The cost is small compared with resolving a shareholder dispute later.