Closed your round – here’s your formalities must-do list

Congratulations! You have completed your fundraising. This article is a reminder of some of the tasks you need to tick-off to complete the formalities. Completing them is important - companies who don’t may look amateurish to future investors and potential acquirers. Remember, it can be very expensive for you to to fix issues if they have been neglected for some time, so don’t put them off!

Many of the formalities relate to submitting documents and forms to Companies House. The easiest way to do this is electronically, using the WebFiling service.

If, instead, you want to send them by post, it’s a good idea to use registered delivery. This way, you have proof of postage, should you need it at a later date.

The address for Companies House is Crown Way, Cardiff, CF14 3UZ. You can see further details here.

Shareholder Resolutions

Any shareholder resolutions passed during your fundraise that require more than 75% shareholder approval are known as ‘special resolutions’. These must be sent to Companies House, to be added to the public companies register.

Ordinary shareholder resolutions (i.e. requiring only 50% shareholder approval) do not need to be sent to Companies House.

If you have passed both ordinary and special shareholder resolutions, as part of the fundraising process, you can submit a document to Companies House containing both types.

The shareholder resolutions produced by your FounderCatalyst funding platform combine both ordinary and special shareholders resolutions and can be found in your Intelligent Data Room. You should ensure they are duly filed with Companies House with 15 days of completing your round.

Articles of Association

As part of your fundraising process, you will have adopted new company articles of association, which again are located in your Intelligent Data Room. You must submit a copy of these to Companies House within 15 days from the date your funding round closed. Again, it’s your responsibility to do this and you can do so via the online filing platform located here. You need to 'change your constitution' and then upload both the Articles and related resolution per:

Companies House forms and timescales

Below are listed some typical forms you may need to file with Companies House. Once again, it is your responsibility to submit them. The time limits are included below, as a gentle reminder.

• SH01 (one month) - You need to complete this form once you have issued new shares.
• SH08 (one month) - Use this form if you have converted one or more shares into a different class (e.g. an ordinary share into an A ordinary share).
• AP01 (14 days) - For when you appoint a new director.
• TM01 (14 days) - For when a director resigns or leaves.

Issuing Share Certificates

Once investors have paid for their shares, you should provide them with a share certificate. These will be available for you (and the investor) to access in your Intelligent Data Room immediately after your funding round has closed. We only issue share certificates to your investors when you have first confirmed on our platform that you have received the money.

For companies with two or more directors, the process is straightforward: we will issue signed share certificates directly from the platform.

However, if your company has a single director then the Companies Act stipulates that any share certificate must be issued with the signature of a director that has been witnessed by an adult who is not related to you. In this instance, the following protocol applies:

1. You should print the share certificate and sign it in the presence of a witness, who should countersign it as prescribed on the certificate.
2. You should send the certificate by registered post to your investor.

Persons with Significant Control (PSC)

You must notify Companies House when you create and/or change a PSC in your company. In the majority of cases, a PSC is defined as someone who holds:

• more than 25% of shares in the company
• more than 25% of voting rights in the company, or
• the right to appoint or remove the majority of the board of directors.

The relevant forms for a change in significant control are usually:

• PSC01 (14 days) - when an individual becomes a PSC
• PSC02 (14 days) - when a legal entity becomes a PSC, and
• PSC07 (14 days) - when someone ceases to be a PSC.

Update the company’s registers

Once you have completed a funding round, don’t forget to update the company’s statutory registers to reflect the recent changes. Your company is required by law to keep up-to-date statutory registers. They include important information such as shareholder details, how many shares they hold, any directors you appoint or who resign, plus any changes to “persons of significant control” (see above).

Make sure you update your register of members on the same day that you issue each share certificate in accordance with HMRC's guidance - especially if you are raising near a time limit under the SEIS or EIS scheme.

SEIS and EIS Forms

You may well have issued shares to investors under the Government’s SEIS and/or EIS schemes. You now need to submit a Form SEIS1 and/or a Form EIS1 to the Small Companies Enterprise Centre at HMRC. For EIS, you can do this now; it’s easy to put it to the end of your to-do list, but your investors will not be happy if you fail to submit on time! For SEIS1, you can only complete this step when your business has spent 70% of the money raised or has been trading for at least 4 months, whichever occurs sooner.

FounderCatalyst offers significant support to customers filing through the (S)EIS1 to (S)EIS3 process - see this page for more details.

Before trying to file either SEIS1/EIS1 forms, make sure you have filed the relevant SH01 form with Companies House.

Once you submit the SEIS1/EIS1 form, HMRC will provide you with Form SEIS3 or EIS3, as appropriate. You need to finish populating these forms - HMRC will provide all the guidance you need – and then send them onto your investors.

Summary

The above list is by no means exhaustive, but I hope it provides a useful aide memoir.

Remember, if your funding round included SEIS or EIS, then make sure that you are aware of the potential ways of accidentally destroying the tax relief for your investors.