Statement of capital

Statement of capital is a summary of a limited company’s issued share capital such as:

  • The total number of shares of the company
  • The aggregate nominal value of the shares

If the company has more than one class of shares, the details of each class of share must be provided in the following manner:

  • Prescribed particulars of the rights attached to the shares
  • Total number of share for each class of share
  • Aggregate nominal value of for each class of share
  • The amount paid up and unpaid on each class of share

The statement of capital is to be completed when incorporating your company. If there is any share allotment during the year, this allotment must be registered with Companies House.

The relevant Companies House forms must be submitted to Companies House notifying any changes to your company’s share capital. These forms are listed below:

Form referencePurpose
SH01 Allotment of shares
Notice of consolidation, sub division of shares or re-conversionof stock into shares or redemption of redeemable shares
SH05Subsequent cancellation of shares held in treasury by a PLC.
Cancellation of re-purchased shares or (for Plc), immediate cancellation of shares re-purchased into treasury.
SH07Cancellation of shares held by or for a plc in accordance with Section 662 of the Companies Act 2006.
SH14 Redenomination of shares
SH15 Reduction of capital as a result of redenomination

Your updated statement of capital must be presented in your Confirmation statement when filing it.

Variation of class rights

Variation of share class rights is allowed by passing a special resolution for limited company.

Every share has its own rights attached to it. The rights typically cover matters such as voting rights, rights to dividends and rights to a return of capital on winding up. This will be referred to as class right in this article.

Procedure for variation of shares rights

Your company’s articles of association may set out class rights and provisions for altering or varying those rights.

If your company’ articles of association do not contain provisions for varying the rights, your company can vary them either by obtaining consent from the shareholders of at least three quarters in nominal value of the issued shares of that class excluding any treasury shares, or by the members of that class passing a special resolution at a separate general meeting.

You must deliver a copy of the special resolution to Companies House.

You must also deliver a Form SH10 called notice of particulars of variation of rights to Companies House within one month of the date of variation.

Objection to variation of shares rights

If your shareholders of not less than 15% of the aggregate of the issued shares of the class in question, disregarding any treasury shares in the class, did not consent to the variation of the class right, they are entitled to apply to the court to cancel the variation.

They must make the application no later than 21 days after the consent was given, or the resolution passed. The court may confirm or cancel the variation and your company must deliver a copy of the court order to Companies House no more than 15 days after it is made.

Restore dissolved company

The Companies Act 2006 has brought in a new provision for limited company to restore a dissolved company through administrative restoration. This is simplified method of restoring a dissolved limited company without having to go through a court. The cost of administrative restoration is affordable than going through Court restoration process.

Administrative restoration is only possible if your limited company had not previously applied for voluntary strike off and your limited company was struck off for less than 6 years and you were in business at the time of your company being dissolved.

Documents required to restore your company

Restoring your limited company through statutory administrative restoration application is to bring your limited company filings with Companies House up to date.

This include the following documents if they were long overdue.

  • Confirmation statement (replaces the annual return)
  • Company accounts
  • Companies House restoration form
  • Waiver letter
  • Statutory filing fees payable to Companies House for the above mentioned submissions.

Feel free to contact us if you require assistance in restoring your dissolved company.

Avoid your company being dissolved

  • Ensure that you are able to access mails sent to your company’s registered office address. Companies House will strike off your company where mails sent to your registered office were returned to Companies House repeatedly.
  • Ensure you submit your confirmation statement on time.
  • Ensure your company account is delivered to Companies House on time. This including dormant company and non- trading company accounts.

Limited company re-registration

Companies House provides re-registration service for limited company that wish to change their legal status to suit their business requirements.

For examples, a private limited company may wish to become a public limited company and raise capital through selling shares to the public.

On the other hand, a public limited company (PLC) may re-register to a private limited company to save auditing costs where a PLC status no longer provides the business with the benefits. The maintenance of a PLC is far more expensive than a private limited company.

A PLC must have their company accounts audited every year and Auditor’s fee can be expensive whereas for a private limited company may claim audit exemption and there is only accountancy costs to pay and no audit fee to pay. This is more affordable.

Companies House provide five types of company re-registration services and they are listed below.

  • From a private limited company (LTD) to a public limited company (PLC).
  • From a public limited company (PLC) to a private company limited (LTD) by shares or guarantee.
  • From a private limited company (LTD) to an unlimited company.
  • From an unlimited private company to a limited company (LTD).
  • From a public limited company (PLC) to an unlimited private company.

The amended certificate of incorporation will be issued by Companies House once your company re-registration is successful. The certificate will present your company changed of name, status and the date of re-registration.

Company audit

Generally, You would require to hire an Auditor to do your company audit. Your Auditor will look at your company’s financial recording system and internal controls systems in place to verify your business operations effectiveness and reliability of the data collected for your company accounts.

Revenues and Expense

There would be an audit on your accounting system in place for recording of sales and expenditure. The way sale and expense is processed whether the expense transaction is authorized for payment and sale deal is recorded on time and if you have a debtors system in place to monitor outstanding sales invoices and how bad debts are dealt with.

Assets and Liabilities

Your Auditor may verify the existence of your business assets and trace it to the ownership and ensure the values of the assets are true and fair and reflect the current market value. The assets of your business mentioned here include stock, trade debtors and property and equipment.

Similar verification will be carried out on liabilities to ensure monies owed by your business are incurred by your company and they are not loans for directors put through to your business.

Internal Control

What kind of internal controls procedure do you have when come to issuing a cheque or making a large sum payment, say above £20,000, whether more than two signatory are required for a cheque amount more than £20,000 or the payment has to be authorized by all the directors for the sum in access of £5,000,000.

Your frequency of reconciliation carried out for petty cash in the office relating to cash expenses.

Accounting Policies

Your accounting policy adopted for stock accounting, if your business hold stock. The policy adopted should bring the valuation of your goods and products to its net realizable value or costs.

How your business assets are depreciated over its useful economic life and what method of depreciation is used for each category of asset and the depreciation is charge to profit and loss account.

Most importantly the policies adopted must be applied consistently from year to year and any changes must be justified.

Audit risk

The risk of fraud and other irregularities of people in your business may attempt to manipulate the figures in your company accounts. For example, in a restaurant business, the cash may subject to misappropriation by any level of staff authorize to deal with cash and your Auditor will be looking at what are the internal controls system are put in place to mitigate the associated risks and to prevent cash being stolen.

Accounting and auditing rules

Consider any accounting or auditing rules applicable to your business as required by statute, for example the audit of Building Societies are governed by the Building Societies Act 1986.

Regulatory body

Consider the requirement of any regulatory body applicable to your business. For example, a registered charity company must comply with the Regulator for Charities in England and Wales in its charitable activities and in terms of its accounting records.

Previous year statutory reports

The trading history of your business provides important gesture to your Auditor as to the way your business has been operated and the inheritance and associated risks level as well as the growth. The following documents provide good indications.

  • Your signed company accounts
  • Auditor’s opinions on your financial statements
  • Regulatory inspections reports on your business, if any.

Audit tests samples characteristics

Before your Auditor could express their opinions on whether your company accounts give a true and fair view, they will perform a number of audit tests.

Your Auditor do not verify every single transaction booked on your company accounts. They used sampling methods when come to their audit tests. The sample selection process is structured and with defined objectives of the audit tests.

Generally, the samples chosen have the following characteristics:


A random sample is one where each item of the population has an equal (or specified) chance of being selected. Statistical inferences may not be valid unless the sample is random.


The sample should be representative of the differing items in the whole population. For example, it should contain a similar proportion of high and low value items to the population such as all the debtors.


Protective, that is, of the auditor. More intensive auditing should occur on high value items known to be high risk.


The client should not be able to know or guess which items will be examined.

Even though your Auditor perform their audit tests on sample basis they still have equal chances of identifying unusual transactions and fraudulent business dealing. Should your Auditor is of the opinion that the financial statements are misleading, they may issue a qualified audit report. The bank and investors may not like to see this type of audit report on your financial statements.

Choosing your Auditor

Auditor of your company must be a member of a recognized professional body and he/she must hold the relevant practicing certificate to practice as an Auditor under the rules of his/her professional body.

The Companies Act recognizes Auditor’s professional qualification from the five professional bodies listed below:

  1. The Institute of Chartered Accountants in England and Wales (ICEAW).
  2. The Institute of Chartered Accountants in Scotland (ICAS)
  3. The Institute of Chartered Accountants in Ireland (ICAI)
  4. The Association of Chartered Certified Accountants
  5. The Association of authorized Public Accountants. A subsidiary of ACCA, refer to

If your company accounts are required to be audited and you are looking for an Auditor, you may contact the above professional bodies, they will provide list of registered auditors for you to choose.

Auditor’s report

Auditor express their opinions by issuing an independent auditor report.

It is the responsibility of your auditor to report to the shareholders of your company as to whether your company accounts have been properly prepared in accordance with the Companies Act and relevant accounting standards have been applied consistently.

Your auditor must also report as to whether your company accounts give a true and fair view of the state of your company’s affairs.

In order for your auditor to form their views and conclusions of the state of your company’s affairs, they will carry out an examination of your accounting records on a test basis to ensure that your company accounts are not materially misstated (incorrect). Your auditor will also read your company’s policy for consistency with their knowledge of your company.

This does not mean that your auditor will check every transaction or that your company accounts have to be 100 percent accurate; just that anyone looking at your company accounts will be able to obtain a fair view of the state of your company’s affairs and will not be misled if they rely upon the figures in your accounts.

Your auditor will issue a qualified audit report or unqualified report. Unqualified report is desired and this means your company accounts are free from material errors and they are reliable.

Permanent file for audit

If your company accounts are subject to audit as required by the Companies Act, you must appoint a registered auditor. The auditor will audit your company accounts and express their opinions on whether your company accounts give a true and fair view.

Your auditor will gather information of your company at the initial stage of appointment for their permanent file for your company. They will ask you for the information, since you have to prepare, gather and provide the information to your auditor, why not you also create a permanent file for your own record. Then pass the file to your auditor to make a copy of it. This can save both yours and your auditor time.

The Permanent File

The permanent file usually contains documents and matters of continuing importance of your company which will be required for more than one audit.

Below are some of the documents and records auditors would keep in your permanent file.

Statutory material

Documents governing the conduct, accounts, and audit of your company.For example, a copy of the Financial Services Act if your company is regulated by the Financial Services Authority (FSA) and other legislation applicable to your business.

The rules and regulations of your company

For limited company, this means the Memorandum and Articles of Association.

For partnerships, it means the partnership agreement.

For sports clubs, the club rules, and so on.

Copies of documents of continuing importance and relevance to your auditor

  • Letter of engagement and minutes of appointment of the auditor. This is particularly important in non-statutory audits as it embodies the auditor’s instructions.
  • Trade, license, and royalty agreements; entered into by your company.
  • Debenture deeds.
  • Leases
  • Guarantees and indemnities entered into.
  • Copies of Confirmation Statement. The Confirmation statement replaces the annual return.

Addresses of the official office and business

Your company’s registered office address and all other offices and premises, with a short description of the work carried on at each branch.

An organization chart

Detailed of the principal departments and sub-divisions thereof with a note of the numbers of people involved.

The names of responsible officials and staff within the organization structure. Extra details should be given for accounting departments.

List of books and records

The place where they were kept. Names, positions, specimens of signatures and initials of persons responsible for books and document should also be included. Account codes and classifications should also be held.

An outline history of the organization

Special mention must be made of the history of Reserves, Provisions, Share Capital, Prospectuses, and acquisition of subsidiaries and businesses. There should also be a record of important accounting ratios.

List of accounting matters of importance

Accounting policies used for material areas such as stock, work in progress, depreciation, research and development expenditure in your company accounts.

Internal Controls

Notes of interviews and correspondence regarding internal control matters and all past letters of weakness.

The business structure within a group and associated companies

A note of the position of your company in the Group and of all subsidiaries and associated companies with holdings therein.

Clients’ Internal Audit and Accounting Instructions

If any.

Details of shareholders and directors

A list of your directors, your shareholdings, and service contracts. This information contained in your Confirmation Statement which can be downloaded from Companies House website.


A list of the company’s properties and investments with notes on verification.

Company’s Advisers

A list of the company’s advisors such as bankers, merchant bankers, stockbrokers, solicitors, valuers, insurance brokers etc.


A list of company’s insurance

The permanent file is updated on annually and usually during the audit. Your company shall provide the information listed above to enable your auditor to complete their audit assignments.

Remember that the information in the permanent file is handled with strict confidence.


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