Starting a company in England can be done through a company formation agents London. However, before starting a company in England it will be wise to understand that corporate personality of any company, basically is the recognition of that company with law, that this company has independent existence. In United Kingdom’s history, this law was meant for the churches or the religious organizations. These religious organizations can thus, have the right to hold, purchase or sell any property. They also had the right to sue someone over something or be sued on their own, without relying on the members of that organization. With time, the corporate personality was then conversed on saleable ventures i.e. roadway construction companies, or parastatals or projects or trading companies, where there was public interest included. By the middle of the nineteen centuries, there arose difficulties in obtaining the funds from the parliament of corporate status by forced businesses to form the “deed of settlement” companies by utilizing the trust instrument. These companies often used instruments of fraud by taking advantage of their extremely complex legal entities. To do a therapy of it, the Series of Mid-Nineteenth Companies Act was passed. This act created a process through which common people can easily form an ordinary registered company with limited liabilities. The consequence of which was could be seen within a few decades, the company that was fortunate for the few goes into being of almost a right. A must know if starting a company in England - Difference between a corporate personality and limited liability Once a company becomes incorporated and a distinct legal personality or entity, the liability of the members of the very company are said to be limited then. But still there is some distinction between the two. Limited liability is the consequence of the existence of a separate personality. As the company is being personified as human beings, they too have some restrictions imposed on them about their legal personality, just like in the case of children. This is so that the company can utilize their legal personality without being imposed by the limited liability, if that is how that statue is conferred. Even today, a company can still be formed, without the limited liability, if it is registered as an unlimited company without limited liability. The Companies Act 1992 provided that two or more people, if they want, can incorporate a company, without or with the signing a memorandum of the limited liability and then after that submitting it to the registrar of the Companies. The logic of the limited liability and the separate personality was not tested to its full extent, until it was exampled in the 1897’s case of Salomon v Salomon & Co. In the above-mentioned case, Mr. Saloman carried the whole business of the company as lone-merchant. His business was of leather merchant. He formed his company in 1892, where he, his wife and all five children has held one share each in the company. All the members of Mr. Saloman family had to get shares on their own name, because of the Companies Act, that every company must have seven shareholders. Mr. Saloman bought the whole company, taking charge of all the leather business. This also gave him the charge to have all the legal assets of the company. Mr. Saloman took a lot of debts for his company too. He then became the second creditor. His personal liability to the company’s debt changed completely, as he become from unlimited liability (a lone trader) to a limited liability (a shareholder). Not only Mr. Saloman was no longer questionable for the debts, he being the manager secured himself over all the company’s assists. He did this in case, if the company fails, Mr. Saloman are no longer liable for the company debts. From this point onwards, the concept of having a corporate personality and limited liability, became two separate towers in the UK law firm. Advantages of the limited liabilities: The obvious advantage is the financial security that comes with a business deal. Company shareholders will be only held liable for the debts of the company, according to their amount of investment. Creditors can research the company and make their own decisions about its creditworthiness before dealing with it. Legal entity deemed to be a separate entity. It has the advantage that the company will exist beyond the age of its members. Without it doubtful that large sectors could be formed or attract investment. Saves the company members from paying a large amount of allowance as taxes. If a person drives his own car and not the company’s car, then he can use tax free fuel. If a person starts a small business and does it at staying at home, then he later can claim the worth of doing this. Encourages entrepreneurial activity by restricting personal risk to the entrepreneur. If the company is a private corporation, then usually the directors are the shareholders, by that they get the ownership and the control of the company. Creditors do not accept extra risk passively, are able to adjust the terms of credit to get more interest. Disadvantages of the limited liabilities: A company start up may include services and products, that can cost you a fortune. Not all creditors are able to adjust the terms of their agreements. There are strict and complex rules for governing the accounts of the company. This might, ends up be, a cost undertaking and time-consuming headache. Does not eliminate financial loss upon insolvency, just means that the entrepreneur does not personally make up for the short fall. There is a restriction in raising the capital of the company via sales of shares of the private company. Tart creditors are not able to research the company; they are liable to just lose out. Selling of shares to increase the company funds might ends up a dispute among the directors and the shareholders. Can encourage excessive risk taking as the entrepreneur will not lose personally. Avoiding the problems of limited liability: Demand a minimum start-up capital for all businesses. This is not much used in any opinion and does nothing once creditors exceed that amount. Compulsory increase for companies. This could be a good idea particularly in respect of tart creditors. Other types of creditor have the opportunity to research the company and negotiate before entering into an agreement.

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