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A Guide to Common Terms You May Encounter When Forming a Company

A Guide to Common Terms You May Encounter When Forming a Company


Deciding to start a business can be a daunting decision. Here at @UKPLC Company Registrations, we want to make the process as simple as possible.

When forming a company for the first time, you’re likely to encounter a lot of jargon you’re unfamiliar with. To help your formation of your new business go as smoothly as possible, we’ve put together this guide of common terms you may encounter when forming a company and what they mean.

Articles of Association

Every company is required to have Articles of Association. The Articles of Association are company rules and are designed to help ensure the company’s business runs as smoothly and efficiently as possible. Companies House provides model articles, which are available for private companies limited by shares, private companies limited by guarantee and public companies.

Joint Venture

A joint venture is a commercial arrangement between two or more economically independent entities. Parties may choose to enter into a joint venture to share costs on a significant project or as part of their strategic planning in particular industries or markets. Joint ventures can be limited liability companies, limited liability partnerships or purely contractual co-operation agreements.

Intellectual Property

Most businesses will own some kind of intellectual property, a term which includes trademarks, copyright, patents and design rights.


Copyright is the protection given to authors of original works of music, literature, drama and art. There is no official registration system for copyright in the UK; if your work is original and more than negligible labour has been expended then copyright is automatic.


A trademark is a symbol, word or words legally registered or established by use as representing a company or product.


A patent is a government authority or licence that gives the holder the right to exclude others from making, using or selling an invention.

Design Rights

Design right automatically protects your design for 10 years after it was first sold or 15 years after it was created, whichever is earliest, and it can be used to stop someone copying your design.

Sensitive Words

Sensitive words are words that require approval by the Secretary of State before you can use them in your company name. These controls exist to ensure a name does not mislead or harm the public. Companies House provides a full list of sensitive words.

Registered Office

A company’s registered office is where all official communications, such as letters from Companies House, will be sent. It must be a physical address in the UK and in the same country your company is registered in, for example a company registered in Scotland must have a Scottish registered office address. It does not have to be the same as the address from which you trade.

Confirmation Statement

The Confirmation Statement replaced the Annual Return in June 2016. You must send this document to Companies House every year to ensure the information held about your company is correct. The information required for the Confirmation Statement includes details of your registered office, directors and secretary, your statement of capital and shareholder information, your SIC code and your register of ‘people with significant control’ (PSC).

Certificate of Incorporation

A Certificate of Incorporation is a document issued to UK companies when they are registered with Companies House and it confirms that the business has been incorporated under the Companies Act 2006 as a legal entity with its own identity.

Limited by Guarantee

Charities and Not for Profit organisations are companies typically limited by guarantee. When a company is limited by guarantee, it does not have a share capital or shareholders and has members who act as guarantors instead. The guarantors give an undertaking to contribute a nominal amount in the event of the winding up of the company.

Limited by Shares

A company limited by shares means that the liability of shareholders to creditors of the company is limited to the capital originally invested. Private limited companies and public limited companies (PLCs) tend to be limited by shares.

Share Capital

Share capital is the capital of a company that comes from the issue of shares. Capital is wealth in the form of money or other assets owned by an organisation available for a purpose such as investing.

Company Register

The company register allows you to maintain all your official documents and details in one place. A register can contain a register of members, register of directors, register of secretaries, minute book and membership certificates. Meeting minutes and other important documents can also be added.

Dormant Company

HMRC considers a company to be dormant for Corporation Tax if it has stopped trading and has no other income such as investments, is a new limited company that hasn’t started trading, is an unincorporated association or club owing less than £100 Corporation Tax or is a flat management company.

SIC Code

A SIC (Standard Industrial Classification) code is a system for classifying industries with a four-digit code. It was introduced as an easy way to find out what a business does.

Person of Significant Control (PSC)

A person of significant control is someone who meets one or more of these conditions in relation to a company:

  • directly or indirectly holds more than 25% of the company’s issued share capital
  • directly or indirectly holds more than 25% of the company’s voting rights
  • directly or indirectly holds the right to appoint or remove a majority of the board of directors
  • has the right to exercise significant influence or control of the company

It became a requirement for companies to keep a register of PSCs in April 2016. The aim of the register is to improve corporate trust and transparency in the UK by making it clear who owns and controls UK companies.

We hope that you find this guide useful. If you were looking for a specific term that does not appear here, please get in touch and we’ll add it to the guide.