New web incorporation service

Companies House has announced a new web incorporation service, which has been up and running since 6 April 2011. It enables anyone to incorporate a simple private company limited by shares (and adopting the basic form of statutory default model articles) online, for a fee of £18. The service is apparently available 24 hours a day, 7 days a week. Companies House has indicated that if the relevant incorporation application is accepted, an e-mail confirmation of incorporation will usually be sent within 2 days.

The service is delivered through the Business Link website, the Government's online resource which is effectively replacing the Business Link regional advice service, due for closure by November this year.

The web incorporation service will, in theory, benefit those who are looking to set up a very straightforward form of corporate vehicle. Until now, they have either had to submit a paper application at a cost of £40 or use a company formation agent, which can be significantly more expensive.

Businesses looking to incorporate should not, however, see this as a replacement for proper legal advice. The basic form of articles will rarely be appropriate for a company with a number of minority shareholders, as they do not, for example, contain a detailed pre-emption mechanism on transfer of shares, and minority protection provisions, which any properly advised shareholders in a joint venture company will almost always require. Also, the service is only available for the incorporation of a private company limited by shares and does not extend to companies limited by guarantee, the usual vehicle for those not-for-profit organisations that wish to incorporate.

Whilst any initiative which is intended to reduce compliance costs is to be welcomed, those businesses which are looking to incorporate should always consult their legal and financial advisors.