Company Formation Solicitors
The structure you choose when you start a business shapes how it is taxed, how it is owned, and what happens when shareholders disagree. Getting it right from the outset is far cheaper than correcting it later.
Company formation is more than filing a registration at Companies House. The articles of association govern the company's internal constitution; a shareholders' agreement defines the rights and obligations of the shareholders that are not appropriate for a public document; and the choice of business structure — limited company, LLP, partnership, or sole trader — has significant tax and liability implications. A solicitor will advise on the right structure, draft the constitutional documents, and ensure the shareholders' rights are protected from day one.
Business Structure & Documentation
Company formation — the structural choices, the constitutional documents, and the shareholder protections that matter.
The documents signed at formation govern the business's structure for years. A solicitor will ensure they reflect what the shareholders actually intend — and protect each shareholder's investment in the way the founding documents were meant to.
Choosing the right structure — limited company, LLP, or partnership
A private limited company provides limited liability for shareholders (their personal assets are protected from company debts), a corporate tax rate on profits, and a clear structural framework under the Companies Act 2006. An LLP provides limited liability and tax transparency (profits are taxed at the member's individual income tax rate, not corporation tax) — making it attractive to professionals (solicitors, accountants) and property businesses. A general partnership provides flexibility but no limited liability — each partner is personally liable for the partnership's debts. A solicitor will advise on the tax, liability, and operational implications of each structure and assist with the formation of the chosen entity.
Articles of association — beyond the Model Articles
The Model Articles of Association prescribed under the Companies Act 2006 apply automatically where a company does not adopt bespoke articles. The Model Articles are appropriate for very simple companies — but they do not provide for many provisions that owner-managed businesses need, including: drag-along rights (allowing a majority to compel a minority to sell alongside them); tag-along rights (allowing a minority to join a majority sale); weighted voting provisions; restrictions on share transfer; and provisions for deadlock resolution. A solicitor will draft bespoke articles that reflect the shareholders' specific intentions — rather than defaulting to generic provisions that may not suit the business's needs.
Shareholders' agreement — the private document that governs the relationship
A shareholders' agreement complements the articles — dealing with matters that are either not appropriate for a public document (articles are public; shareholders' agreements are private) or that require contractual enforcement (articles are enforceable only by the company or its shareholders, not by third parties). A shareholders' agreement typically covers: pre-emption rights on transfer; good leaver / bad leaver provisions (valuing the shares of a shareholder who departs on good or bad terms differently); non-compete obligations; director appointment rights; reserved matters requiring unanimous shareholder consent; and dividend policy. A solicitor will draft the shareholders' agreement and negotiate the terms between the founding shareholders before the agreement is signed.
Share classes — different rights for different shareholders
A company can issue multiple classes of shares — each with different rights to vote, receive dividends, and participate in a return of capital. A company might issue: Ordinary A shares (voting and dividend rights) to the founders; Ordinary B shares (non-voting, dividend rights only) to employee shareholders under an EMI option scheme; and Preference shares (priority dividend and return of capital) to an investor. A solicitor will advise on the appropriate share class structure, draft the rights attaching to each class, and ensure the articles and shareholders' agreement reflect the intended allocation of voting control and economic rights.
LLP formation and members' agreement
An LLP is formed by registration at Companies House and governed by an LLP agreement — the equivalent of a shareholders' agreement. The LLP agreement covers: profit-sharing between members; decision-making procedures; rights to draw income; retirement and resignation provisions; expulsion of members; and the valuation and payment of a departing member's interest. Without an LLP agreement, the default LLP Regulations 2001 apply — providing that profits are shared equally (regardless of contribution) and that decisions are made by simple majority. An LLP agreement tailored to the specific partnership avoids the default provisions applying in a way that no member intended. A solicitor will draft the LLP agreement and negotiate its terms with all the founding members.
Director service agreements and employment contracts
A director's service agreement is the employment contract between the company and its executive directors — setting out salary, bonus arrangements, notice periods, benefits, and post-termination restrictions. Without a written service agreement, the terms of a director's employment are implied by statute and case law — giving the director far more flexibility to leave and compete than the company may want. A solicitor will draft a director's service agreement that reflects the specific commercial arrangement, includes enforceable post-termination restrictions (non-compete, non-solicitation), and provides a clear framework for removal and compensation on exit.