Corporate Services UK
What is a corporate company?
A corporate company is basically a corporation. The basic business definition for a corporation is that of a firm which abides by the legal requisites which are needed to be recognized along with the availability of a legal presence. It serves as an entirely separate entity that is distinct from those who own it. Corporate businesses are basically owned by their shareholders or stockholders. These are the individual who have their shares in the losses and profits generated through the operations of that firm. There are three distinct characteristics of a corporation company:
The very first one is for the firm to have legal existence. This firm can be owned by a singular individual looking to sell, form a contract, buy or carry out any business transaction with other individuals and firms. It will have the definite potential of being sued by any other individual or company owing to its legal presence. The firm should be able to receive reward for its good operations and be punished for any offensive act.
The second characteristic is that of the limited liability of the firm. The firm and its owners should have minimum possible liability to the creditors and the other parties such as the obligators. The liability should be in accordance with the firm’s resources until or unless personal guarantees are provided by the owners.
It is necessary that the firm has continuity of existence. Of course a corporation is supposed to continue its life cycle in the corporate sector. A firm has the potential of living far longer than the capacities and life spans of the owners. The ownership is easily transferred through shares being sold or gifted.
There is an array of different decisions involved in the formation of company. The managers have a lot on their mind in terms of decision making from strategy making to the basic operation of the firm. The major decisions include selection of products or services to be performed by the firm along with the hiring of employees. The hiring takes up a lot of time as well as it is best to choose employees with the same thinking pattern and ideology as that of the company. It is because of this that a thorough screening is necessary followed by formal training of those chosen for work. Setting up of the location takes up a lot of decisions as this can majorly effect the operations of the business.
One of the most critical decisions however is to chose the nature of your business or company. The managers or owners of the company have to decide beforehand whether the company should be set up as a partnership, corporation or sole proprietorship. This decision depends on the nature of the product and service along with vision and mission of the company. A sole proprietorship has the potential of being transformed in to a partnership and corporation later in life. You have to make sure that the operations are in accordance with the laws of your country.
Separating the legal entity
A corporation is essentially an entity of the business world. The corporation is legally separated from the employees and owners. You can understand corporation better if you consider it as an artificial person of legal existence. This legal individual has the potential to get in to contracts, sue other parties and to be sued. The assets of the company belong to it along with all of the liabilities which are owed by the entity. It is commonly observed that all the companies of large sizes are organized as corporations.
Transferring ownership and continuous life
Corporations tend to have a continuous life form. These entities continue their life cycle in the industry separate from their owners. This clearly means that in case of changes in the owners due to selling of stock- the corporation’s operations will not be effected. The corporation will continue its business in the same manner as a separate entity. Features of corporations tend to be quite different from those of partnerships. In case of addition or removal of a partner from the partnership; the previous partnership is automatically dissolved and a new one is introduced in the business.
One of the most significant of features of any corporation is the limited liability. What does limited liability mean for the owner then? Limited liability means that the stockholders have limited association with the debts of that particular corporation. The most to lose in an investment would be the shareholder’s total investment. There will be absolutely no additional loss. You can compare this characteristic with partnerships and sole proprietorship as well and realize the importance of the corporation as they are personally liable for the debts taken by the business for its operations.
Separating ownership from management
A corporation doesn’t need to be run by its owners – the stockholders. Stockholders typically elect a board of directors. That board will choose executives to run the actual business. Imagine it another way – where stockholders had to actually meet and work in the companies they own. You couldn’t just buy a few shares of stock. Instead, you would have to regularly don a suit, show up at meetings, and write memos to your employees. Like on Mad Men.
Taxing corporations twice
It is quite common for the corporations to be subjected to double taxation. What does it mean by double taxation? This basically means that the corporation is required to pay its own income taxes to the authorities of the state and the federal government. There are cases in which the corporation is required to pay foreign governments as well. Moreover any form of income that is passed on to the shareholders in the form of dividends is taxed in the second duration. The shareholders are required to ensure payment of their own income taxes on the respective dividends that they receive. However in the case of partnerships and sole proprietorships the dividends are only taxed the first time. Moreover the rules set up by IRS allow certain kind of corporations to be taxed in a similar manner as the partnerships.
A major benefit in the case of corporation is of the limited liability that is thoroughly enjoyed by the stockholders. It basically ensures the shareholders the safety of their money and a safe investment in general. Due to this reason the state and federal governments have set up rules in order to carry out cautious monitoring of these corporations to assure that the investors along with the creditors have all the information required in order for them to make informed decisions.
What is a Company Secretary?
The company secretary is a kind of professional responsible for assuring that the organization and its operations are fully complied with the standard legal and financial practice along with the maintenance of high standards of corporate governance. Though these standards are not a strict requirement but yet the company secretarial services include provision of legal advice by the professionals along with a sound understanding of the different laws of that particular area of work. Company secretaries have a strategic position and importance when it comes to governance of all the operations being carried out within an organization. These professionals are also responsible for acting as a communication point between the shareholders of the company and the board of directors. Their services include timely reporting about the developments and procedures of the company. They have to additionally ensure that the reporting is accurate.
These individual have the potential of creating an important link between the executive management of the organization and the board of directors. It is required by law for the public limited companies to hire a company secretary to carry out these services. Moreover many private companies play the same role as well. A company secretary has the option of finding many positions in almost all sectors of both public and non-profit sectors. Other job options include:
- head of governance
- head of democratic services
Typical work activities
There are different kinds of work activities that the company secretaries are responsible for. These individuals are required to work and around the management board. The professionals are required to report to the chairman in most cases. This offers them the chance to provide their expert advice along with the right kind of guidance on different matters pertaining governance and law at the top of an organization. This particular role is responsible for covering an array of different functions along with specified tasks which are generally dependent on the size and kind of the company. Some typical activities involved in their services include the following:
- They are required to follow up on actions from all kinds of meetings
- They are responsible for preparation and organizing of agendas and papers for different committees and board meetings along with annual general meetings.
- Drafting of resolutions and lodging of required forms along with annual returns with the company house is included in their services.