Post date: Jul 22, 2011 1:8:48 PM
Incorporation, the first step on the road to legitimacy and taxes. It turns out that this is both remarkably simple, an online process that can be accomplished in under ten minutes, and also rather involved if you don't already understand the rules behind the concepts. For example, every signatory of the Memorandum of Association must own at least one share (makes sense) and the online application allows you to specify how many shares a person holds and how much of the nominal share value is paid or unpaid. Simple in concept but there are some questions that the help pages just don't touch:
How can a company have a value prior to incorporation? The corporate entity doesn't exist so how can it possibly hold assets at this point?
How can a signatory have paid any of the nominal share price prior to incorporation; to whom would they have paid it?
Normally I'd just shrug at questions like these and assume that they're mostly unimportant, but for some reason I feel wary when I'm signing legal documents and don't understand how some of the possible responses can apply. In the interests of not requiring a degree in corporation law before I start this business however I've crossed my fingers, hit submit and am now waiting for Acme Inc. to deposit an anvil in my immediate vicinity via their patented orbital drop delivery service.