We have formed over 1 million UK limited companies. With this many companies under our belt, not only do we know how to get companies incorporated, but we also know what gets company formations rejected by Companies House (the UK’s registrar of companies). In this post, we’re going to look at the top reasons why new company applications are rejected, and how we can help you avoid this.
The top reasons why Companies House rejects applications
Whether companies are formed through us, competing company formation agents, accountants, or directly with Companies House – the majority of companies set up in the UK are formed online. The ability to incorporate a company online has eradicated many of the reasons why a company application may have been rejected 20 years ago.
For example, to register a private company limited by shares (the type of company we’ll be concentrating on in this post), you need at least one director and one shareholder. Previously, when paper incorporations were predominant, applications would have been knocked-back because basic information was missing – such as no shareholder was named in the incorporation documents.
Now that the task of forming a company can be completed online, you simply wouldn’t be able to submit an application if you haven’t named a shareholder.
As you’ll see, most applications are rejected not because the information is missing, but because the information that has been provided is incorrect.
So, here are the top reasons why company formations are rejected by Companies House…
1. The company name doesn’t include Limited, Ltd, Cyfyngedig or Cyf
The majority of private limited companies need to include the ‘Limited’ suffix, or a version of it (Ltd, Cyfyngedig, or Cyf). The only exception to this is if a company is a registered charity or limited by guarantee that meets very specific requirements.
Applications that reach Companies House without the necessary suffix will be declined.
2. The company name includes a sensitive word or expression but supporting documentation hasn’t been provided
There are certain words and expressions that can’t be used in a company name without supporting documentation, such as a letter of non-objection, from an authorising body.
For example, to form a company with the word ‘Bank’ in it, permission must be granted by the Financial Conduct Authority.
This regulation is in place to ensure that the public can not be misled or harmed by a company.
If a company name includes a sensitive word or expression and the necessary approval hasn’t been included as part of the application, Companies House will refuse it.
If you are forming your company with us, we will notify you if your proposed name includes any sensitive words and expressions and tell you who you need to contact (and what information you need to provide) to get the necessary permission. If granted, you can upload proof of this permission as part of your company formation.
3. The company name is not unique or is too similar to another company
Companies House does not allow duplicate names on the register. They also won’t allow a company name to be too similar to another name on the register unless the original company gives their permission (normally this happens if the new company is part of the same group as the original company).
- ‘Same as’: Some words and punctuation do not differentiate a name. For example, if ‘Your Company Name Ltd’ has already been registered, Companies House would not allow ‘‘Your Company Name UK Ltd’.
- ‘Too like’: Likewise, a company name can’t be broadly too similar. For example, if ‘Your Company Name Ltd’ has already been registered, Companies House may not allow ‘‘Ur Co Name Ltd’.
4. The company name is offensive
If your proposed company name includes a word or term that could be deemed offensive, your formation will be refused.
Of course, what causes offense differs from person to person, so Companies House have to be careful in regard to the names that do get accepted. Here are some of the names that Companies House have rejected in the past for being offensive:
- Building That Fought Hitler Limited
- Cambridge Cannabis Club Limited
- Fancy a Bomb Ltd
- Fit as Fork Ltd
- Go Fudge Yaself Ltd
- Just Weed Ltd
- The Great Big Corrupt Company Ltd
5. The registered office is not based in the UK
The registered office address must be based in the UK. If you enter a registered office that is based anywhere other than England, Scotland, Northern Ireland, or Wales, the formation will be dismissed.
Don’t have access to a UK address to use as your registered office address? No problem. A number of our company formation packages include our Registered Office Service, where you can use our address as your registered office. We also offer a dedicated Non-Residents Package for customers who do not live in the UK (that includes the Registered Office Service).
6. The address doesn’t match the country selected
When forming a company, you need to provide a number of addresses:
- The registered office address
- The service address (also known as a correspondence address) for every director, shareholder, secretary, and person with significant control (PSC)
- The residential address for every director and PSC
If the town entered for any of these addresses does not sync with the country, the application will not be accepted.
For example, if Glasgow is entered as the town but England is selected as the country, Companies House will not form the company.
7. The residential address for a director or PSC does not appear to be a residential address
Directors and PSCs must provide a residential address when being appointed. This address is not placed on the public register (unless the residential is also being used as the registered office address and/or service address).
This must be the actual location where the person being appointed lives.
If an obviously non-residential address – such as a business centre address or an address that stretches across multiple numbers – is entered as the residential address, Companies House will reject the application.
8. A PO box address is used as the registered office
The registered office address must be a physical location where official company documents can be delivered. Any formation request that includes a PO Box address being used as the registered office will be refused. Each PO Box has a full underlying postal address, and this must be entered instead to be accepted.
9. A proposed director is not suitable
Not everyone can be a company director. If any of the below applies to a director you are attempting to appoint at the time of your company’s formation, your application will be refused:
- The person is aged under 16 years old
- The person is an undischarged bankrupt
- The person has been disqualified from being a company director (this can happen for a number of reasons)
10. An initial is being used in a director, secretary, shareholder, or PSC’s name
You must provide the full name for your appointments. Initials are not accepted.
If an officer legitimately has just an initial as part of their name, supporting documentation to prove this must accompany the formation request.
11. Invalid information is entered
When it comes to naming and appointing the people in your company, the company formation process includes a number of open fields that allow you to type what you wish. These include the following fields:
However, if the information provided within these is not considered valid by Companies House, your application will be refused. For example, if you enter Londoner as your nationality – your application will likely be rejected.
12. The company being formed is a shareholder of itself
Companies can hold shares in other companies. However, they can’t issue shares to themselves.
Therefore, if you are forming a company and choose to add that very same company as a shareholder (regardless of how many shares you have chosen to allocate), your application will be pushed back.
13. Decimal shares have been allocated
When forming your company, the individual shares that you give to each shareholder must be whole – they cannot be split into anything less.
This commonly happens when someone wishes to issue a particular number of shares, such as 100, to an uneven amount of shareholders, such as 3.
So in this instance, they attempt to give 33.33 shares to each shareholder (in order to have an equal share split).
Any applications that attempt to do this will be rejected.
To ensure an equal share split in the company, simply give each shareholder the same amount of shares.
14. The bespoke articles of association are not correct
The articles of association is the document that outlines how the company will be run. We use a modified version of the model articles of association to form companies. These suit the majority of private limited companies that are formed in the UK.
Some business owners choose to register using their own bespoke articles of association. Because it is a complex document, this often results in mistakes being made and the formation being declined.
We can help if you wish to register a company using your own articles of association. Get in touch with our Company Secretarial Team via firstname.lastname@example.org or 020 3984 5387 and we’ll be happy to help.
15. The corporate appointment information is incorrect
It is possible to appoint another company to a role within the company that is being formed (if appointing a corporate entity as a director, you must have at least one actual person in the director role too).
This corporate entity can be based in the UK or overseas.
When the company is based outside of the UK, you must provide the ‘Law Governed’ and ‘Legal Form’. These two fields can be problematic, with incorrect information often being provided or the information for the fields being omitted entirely. This then results in the application being rejected.
To clarify and give an idea of what does need to be provided, here’s a definition of the two terms:
Law Governed: The act that regulates the company’s activity. For the UK, this is the ‘Companies Act 2006’.
Legal Form: The structure of the company. For the UK, this could be a ‘private company limited by shares’.
So there you have it, the top reasons why company formations are rejected
In some instances, an application being declined is good. If a company is formed with incorrect information, you will have to take steps to fix it post-formation, which is trickier than fixing it before the company has been formed.
For example, if a company was formed with duplicate directors, you would need to resign one of them via a letter of resignation, the necessary resolution, and the filing of the TM01: Termination of appointment of director form. This a nuisance, and whilst you can remove the erroneous director from the company, the fact that a mistake was made will always appear on the public register.
It’s far better for Companies House to push back the application, allow you to fix the problem, and then resubmit. To confirm, resubmitting an application comes with no extra cost.
Nonetheless, even better than this is avoiding mistakes in the first place.
We can get your company formation accepted the first time
If you choose to form your limited company with us, regardless of the company formation package that you opt for, you will find the simplest possible process.
Through our experience, we know what areas of the formation can cause confusion. These sections are clearly explained in the easiest terms, with jargon kept to a minimum. At the end of the process, on the ‘Summary’ page, you will be able to review and edit the information that you have provided.
If you do have any questions about your company, we offer 24/7 support. Choose the means of contact that suits you (phone, email, or live chat) and get in touch. We’ll then be able to assist you.
For further assurance, take advantage of our Pre-Submission Review
When purchasing your company formation package, you will notice a ‘Pre-Submission Review’ product in your basket, priced at £4.99.
By leaving this in, our team of company experts will look over your application in detail, checking for the mistakes we’ve mentioned in this post, as well as typos that could cause you unnecessary work in the future. If we spot something that doesn’t look correct, we’ll be in touch to check with you and then fix the problem accordingly.
Only when we are satisfied that everything is correct will we submit your application to Companies House.
Thanks for reading
So there you have it, 15 reasons why new company applications are rejected.
Follow our advice (and form your company with us) and your company formation will go ahead smoothly with not a rejection in sight.
We hope you have found this post helpful. Please leave a comment about anything we’ve raised and we’ll be happy to help.