Company Law Glossary UK: Terms Explained (2026)

At a glance

• Two parts. Part I covers Companies House and administrative terms; Part II covers broader corporate and commercial law terms used in transactions and disputes.
• Statutory home. Most core definitions in Part I sit in the Companies Act 2006 — the Act that governs how UK companies are formed, run and dissolved.
• Recent change. The Economic Crime and Corporate Transparency Act 2023 has amended parts of the 2006 Act — most visibly identity verification (mandatory from 18 November 2025) and the "appropriate address" rules for a registered office and registered email address (in force from 4 March 2024).
• Company vs LLP. A limited company and a limited liability partnership (LLP) are separate legal structures governed by different Acts — the Companies Act 2006 for companies, the Limited Liability Partnerships Act 2000 for LLPs — and some terms (like "designated member") apply only to one of them.
• Not every term is statutory. Some entries below are shorthand used in business and legal practice rather than words defined by an Act. Where that is the case, the entry says so rather than pointing to a section number that does not exist.

How to use this glossary

A glossary is, in practical terms, a dictionary with a narrower focus. This one blends statutory wording from the Companies Act 2006 with long-established commercial law concepts and current Companies House practice.

1. Start with the filing or document you are looking at. If a term has come up in a specific document — a confirmation statement, an SH01, a set of draft Articles, a share purchase agreement — begin there. The surrounding words usually tell you which sense of the term applies.
2. Check which part of the glossary applies. Part I leans toward Companies House and the administrative side of running a company or LLP. Part II covers wider corporate and commercial law concepts you meet in transactions and disputes. Some terms sit in both areas, so it is worth scanning across both parts.
3. Read the definition alongside the source document. Definitions work best when you map them back to the clause or form that prompted the question. If the glossary says a charge must be registered at Companies House within 21 days to keep its priority, check whether that has actually happened for the document in front of you.
4. Note anything that looks time-sensitive. Some concepts — directors' duties, minority shareholder remedies, identity verification deadlines — depend on facts and timing. If a definition mentions a deadline or condition, write it down before it becomes urgent.
5. Get a conversation if the stakes are real. A glossary entry tells you what a word means. It does not tell you whether a clause is a good idea for your business, whether a filing is overdue, or whether a dispute is worth pursuing. For those questions, a phone call with someone who can listen to your situation is far more useful than any written definition.

Part I — Companies House and company administration terms

Company

A "company" means a company formed and registered under the Companies Act 2006, or an existing company that was registered under an earlier Companies Act (section 1). Registration creates a separate legal person, distinct from its shareholders and directors.

Private company and public company

Every company is either private or public. Section 4 of the Companies Act 2006 defines a public company as one limited by shares or by guarantee with a share capital, whose certificate of incorporation states that it is public and which has complied with the Act's re-registration requirements; a private company is simply any company that is not public. A public company must have allotted share capital of at least £50,000 (the "authorised minimum" under section 763) before it can start business or borrow — a private company has no equivalent minimum.

Memorandum of association

The memorandum is the short document subscribers sign on incorporation, stating their wish to form the company and (for a company with share capital) agreeing to take at least one share each (section 8, Companies Act 2006). Since the 2006 Act, it is a one-off historical document rather than an ongoing constitutional one — the articles of association carry that role.

Articles of association

The articles are the company's internal rulebook, covering matters like how shares are transferred, how directors are appointed and how meetings are run. A company must have articles under section 18, and they bind the company and its members as if signed by each of them (section 33). Where a company does not register its own articles, or does not cover a particular point, the relevant model articles fill the gap by default. See our guide on articles of association for a fuller explanation.

Director

"Director" includes any person occupying the position of director, by whatever name they are called (section 250, Companies Act 2006). This is deliberately broad — it catches someone acting as a director in substance (sometimes called a "de facto director") even if never formally appointed, alongside anyone with the formal title.

Shadow director

A shadow director is a person in accordance with whose directions or instructions the company's directors are accustomed to act (section 251, Companies Act 2006). A person is not treated as a shadow director purely because the board follows advice they give in a professional capacity. A shadow director can still owe directors' duties and face personal liability, even without ever being appointed.

Corporate director

A corporate director is a company (rather than an individual) appointed to a board. UK law now restricts this: since reforms brought in alongside the Economic Crime and Corporate Transparency Act 2023, a corporate director must itself be a UK company whose own directors are all natural persons who have verified their identity. See our guide on appointing a corporate director (form AP02) for the filing mechanics.

Company secretary

A private company is not required to have a secretary (section 270, Companies Act 2006) — this is an option, not a default requirement, following the 2006 Act's abolition of the old mandatory rule. Public companies must still have a qualified secretary. See our guides on appointing a company secretary (AP03) and appointing a corporate secretary (AP04).

Member (shareholder)

The subscribers to the memorandum become members on registration; anyone else who agrees to become a member and whose name is entered in the register of members is also a member (section 112, Companies Act 2006). "Member" and "shareholder" are used interchangeably for a company limited by shares, though a guarantee company has members but no shares.

Person with significant control (PSC)

A PSC is an individual who meets one of the conditions set out in Schedule 1A to the Companies Act 2006 — broadly, holding more than 25% of the shares or voting rights, holding the right to appoint or remove a majority of the board, or otherwise having significant influence or control. Most UK companies must keep a PSC register and report this information to Companies House. Since the Economic Crime and Corporate Transparency Act 2023, new PSCs must verify their identity within 14 days of being registered.

Identity verification

Identity verification is a Companies House check confirming a person is who they say they are, either directly through Companies House's own service or via an authorised corporate service provider. It became mandatory under the Economic Crime and Corporate Transparency Act 2023 from 18 November 2025 for new director appointments and new PSC registrations, with existing directors and PSCs phased in over the following 12 months, largely through the confirmation statement. Companies House can reject a filing that depends on an unverified individual.

Registered office

Every company must have a registered office in the part of the UK where it is registered (section 86, Companies Act 2006). Since 4 March 2024, section 86 has required the address to be an "appropriate address" — one where post to the company would be expected to reach someone acting for it, and where delivery can be recorded — which means a bare PO Box is no longer acceptable. Companies House can move a company to a default address if its registered office stops being appropriate, and ultimately begin striking-off action if the position is not corrected.

Registered email address

Since 4 March 2024, every company must also maintain an "appropriate" registered email address under section 88A, Companies Act 2006 (inserted by the Economic Crime and Corporate Transparency Act 2023) — one where emails from the registrar would be expected to reach someone acting for the company. It is not published on the public register; it exists for Companies House to contact the company directly.

Confirmation statement

The confirmation statement is an annual filing confirming that the information Companies House holds about the company — officers, registered office, PSCs, share capital and so on — is up to date (section 853A, Companies Act 2006). It must be delivered within 14 days of the end of each review period. It replaced the old annual return and has since been expanded by the Economic Crime and Corporate Transparency Act 2023 to also capture registered email address confirmation and identity verification statements.

Confirmation period / review period

The confirmation period (also called the review period) is the 12-month window a confirmation statement covers, running from either the company's incorporation date or the date of its last confirmation statement. The statement is due within 14 days after the period ends.

Charge

A charge is security a company grants over its assets or undertaking in favour of a lender or other creditor. Under section 859A, Companies Act 2006, most charges created by a UK company must be registered with Companies House within 21 days, along with a certified copy of the instrument creating it, or the charge risks becoming void against a liquidator, administrator or other creditors.

Fixed charge and floating charge

A fixed charge attaches to a specific, identified asset (like a property or a piece of equipment), and the company generally cannot deal with that asset without the lender's consent. A floating charge hovers over a changing class of assets (like stock or receivables) and only "crystallises" into a fixed charge over the assets then held on a triggering event, such as default or insolvency. Both are registrable charges under section 859A, and the distinction has been shaped extensively by case law rather than a single statutory test.

Debenture

"Debenture" includes debenture stock, bonds and any other securities of a company, whether or not they create a charge over its assets (section 738, Companies Act 2006). In practice, most debentures used by UK lenders do include a charge, but the word itself is wider than that.

Ordinary resolution

An ordinary resolution is a resolution of the members passed by a simple majority — more than 50% of the votes cast (section 282, Companies Act 2006). Anything that can be done by ordinary resolution can also be done by special resolution.

Special resolution

A special resolution requires a majority of not less than 75% (section 283, Companies Act 2006). Company law reserves special resolutions for more significant decisions — changing the articles, changing the company's name by resolution, or reducing share capital, for example — and the resolution must be expressly proposed and passed as "special."

Annual general meeting (AGM)

Every public company must hold an AGM within six months of its accounting reference date, and every traded private company within nine months (section 336, Companies Act 2006). Ordinary private companies are not required to hold an AGM at all under the 2006 Act, though their articles can still require one.

Allotment of shares

Allotment is the act of the company creating and issuing new shares to a subscriber. Directors cannot allot shares without proper authority: under section 550, Companies Act 2006, directors of a private company with only one class of shares can allot without further authorisation unless the articles say otherwise; in any other case, section 551 requires prior authorisation by ordinary resolution or the articles.

Pre-emption rights

Existing shareholders' statutory right of pre-emption means new shares generally must be offered to existing ordinary shareholders first, in proportion to their existing holdings and on terms at least as favourable, before being offered elsewhere (section 561, Companies Act 2006). These rights can be disapplied by special resolution or, for a private company with one class of shares, excluded in the articles.

Designated member (LLP)

In a limited liability partnership, designated members take on the LLP's statutory administrative duties — signing the accounts, filing the confirmation statement, and being the main contact point with Companies House. The Limited Liability Partnerships Act 2000 requires at least two designated members; if none, or only one, is specified, every member is treated as designated.

Striking off (dissolution)

Companies House can strike a company off the register — and dissolve it — where it has reasonable cause to believe the company is not carrying on business or in operation (section 1000, Companies Act 2006). A company can also apply for its own voluntary strike-off. Either way, notice is published in the Gazette before dissolution takes effect.

Restoration

A company struck off the register can, in certain circumstances, be restored — either administratively by Companies House or by court order under Part 31, Chapter 3, Companies Act 2006. Restoration is generally sought by a former director, member, or creditor with an interest in reviving the company.

Part II — Corporate and commercial law terms

Shareholders' agreement

A shareholders' agreement is a private contract between some or all of a company's shareholders, sitting alongside the articles of association. Unlike the articles, it is not filed at Companies House and its terms are confidential to the parties. It typically covers matters the owners want to agree privately, such as funding commitments, exit rights, dividend policy and dispute resolution.

Consideration

Consideration is what each party gives or promises in return for what they receive under a contract — money, goods, services, or a promise to act or not act. It is one of the elements generally required for an English law contract (other than a deed) to be enforceable. In a sale of a business, "consideration" is often the more precise legal term for what a lay person would call the price.

Asset sale and share sale

These are the two basic structures for buying a business. In an asset sale, the buyer acquires specified assets (and sometimes liabilities) directly, while the seller's company continues to exist. In a share sale, the buyer acquires the shares in the company itself, inheriting everything the company owns and owes, including historic liabilities. The choice affects tax treatment, employee transfer obligations and risk allocation, and is usually negotiated early in a deal.

Directors' duties

The general duties a director owes to the company are codified in sections 171 to 177 of the Companies Act 2006: to act within the company's constitution and for proper purposes (s.171), to promote the success of the company (s.172), to exercise independent judgment (s.173), to exercise reasonable care, skill and diligence (s.174), to avoid conflicts of interest (s.175), not to accept benefits from third parties (s.176), and to declare an interest in a proposed transaction (s.177). Breach can expose a director to personal liability to the company.

Connected person

A person connected with a director includes certain family members, companies the director controls, and certain trustees and partners, as defined in sections 252 to 256 of the Companies Act 2006. The concept matters because several provisions of the Act — including rules on loans to directors and substantial property transactions — apply equally to transactions with a director's connected persons.

Derivative claim

A derivative claim is a claim brought by a member on behalf of the company, in respect of a cause of action that belongs to the company itself — typically alleging negligence, default, breach of duty or breach of trust by a director (section 260, Companies Act 2006). Because the right to sue belongs to the company, not the member personally, the court's permission is needed for the claim to continue past a preliminary stage.

Unfair prejudice petition

Under section 994, Companies Act 2006, a member can petition the court on the ground that the company's affairs are being, or have been, conducted in a way that is unfairly prejudicial to the interests of members generally or of some part of the members. The court's remedial powers — which can include ordering the other shareholders to buy the petitioner out — sit in section 996.

Just and equitable winding up

Separately from unfair prejudice, a member can petition the court to wind up the company on the ground that it is "just and equitable" to do so (section 122(1)(g), Insolvency Act 1986). This is typically used for the most serious breakdowns in a small company — for example, where the whole basis of trust between quasi-partners has collapsed — since winding up ends the company rather than just adjusting the relationship between shareholders.

Administration

Administration is a formal insolvency procedure aimed at rescuing a company, or achieving a better result for creditors than an immediate winding up, under Schedule B1 to the Insolvency Act 1986. An administrator, who must be a licensed insolvency practitioner, takes control of the company and its affairs, and the company gets a moratorium protecting it from most creditor action while a plan is worked out.

Liquidation (winding up)

Liquidation is the formal process of closing a company down, realising its assets, paying creditors so far as funds allow, and dissolving the company. It can be a members' voluntary liquidation (the company is solvent), a creditors' voluntary liquidation (the company is insolvent but the shareholders start the process), or a compulsory liquidation ordered by the court, most commonly on a creditor's winding-up petition under section 122, Insolvency Act 1986.

Wrongful trading

A director can be personally liable to contribute to a company's assets if, once they knew or ought to have known there was no reasonable prospect of avoiding insolvent liquidation, they failed to take every step to minimise loss to creditors (section 214, Insolvency Act 1986). Unlike fraudulent trading, wrongful trading does not require dishonesty — a director can be liable for poor judgment alone once the company is in the insolvency zone.

Fraudulent trading

Fraudulent trading is a more serious allegation than wrongful trading: it applies where a company's business has been carried on with intent to defraud creditors, or for any other fraudulent purpose (section 213, Insolvency Act 1986). It can also be prosecuted as a criminal offence under section 993, Companies Act 2006, regardless of whether the company is being wound up. Because dishonesty must be proved, findings of fraudulent trading are rarer than findings of wrongful trading.

Fiduciary duty

A fiduciary duty is an obligation to act in good faith and in the interests of another, avoiding conflicts and unauthorised profit. Directors are treated as fiduciaries of their company, and several of the codified duties in sections 171 to 177 of the Companies Act 2006 (particularly the duties to avoid conflicts of interest and not to profit from position) reflect fiduciary principles long developed by the courts before being restated in the 2006 Act.

Indemnity

An indemnity is a contractual promise by one party to compensate the other for a specified loss, cost, or liability, regardless of fault. It is a common feature of share purchase agreements, where a seller may indemnify a buyer against a specific known risk (such as an ongoing tax dispute) rather than leaving the buyer to rely on a general warranty claim.

Warranty (in a share or business sale)

A warranty is a contractual statement of fact about the company or business being sold — for example, that the accounts are accurate, or that there is no undisclosed litigation. If a warranty turns out to be false, the buyer can claim damages for breach of contract. Warranties are usually qualified by a disclosure letter, in which the seller discloses specific facts that would otherwise make a warranty untrue.

Novation

Novation is the process of substituting a new party into an existing contract in place of one of the original parties, with the consent of everyone involved, so the new party takes on the rights and obligations under the contract as if they had always been party to it. It is distinct from an assignment, which generally only transfers rights (not obligations) and does not require the other party's consent in the same way.

Force majeure

A force majeure clause allows a party to suspend or excuse performance of a contract where an event outside its control — commonly listed examples include natural disasters, war, or government action — prevents performance. There is no general doctrine of force majeure in English law; it depends entirely on what the contract itself says, so the precise wording of the clause (and what events it actually lists) is what matters.

Quorum

A quorum is the minimum number of people who must be present for a company or board meeting to be validly held and for business to be transacted. For general meetings, the default under the model articles is two qualifying persons (or one, for a single-member company), but this can be changed in a company's own articles — it is a constitutional matter rather than a fixed statutory number for every company.

A note on scope

This glossary covers terms most relevant to running a UK company or LLP and to common corporate and commercial transactions in England and Wales. Some concepts — particularly directors' duties, minority shareholder remedies, and wrongful or fraudulent trading — depend heavily on the specific facts, and a glossary definition should not be treated as a conclusion about your own situation. This page provides general information and is not legal advice. The law described was accurate as at August 2026 and is subject to change — always check GOV.UK and legislation.gov.uk for the current position, and get advice tailored to your circumstances if the stakes are real.