This guide is maintained as a current resource for July 2026 and covers only the laws of England and Wales. Information is for general guidance, not legal advice. Consult a qualified solicitor for advice specific to your situation.
Statement of capital at incorporation explained in UK company law, including what it shows, required share information, nominal value, shareholder structure, and Companies House requirements under the Companies Act 2006.
A statement of capital at incorporation is a mandatory Companies House filing for companies limited by shares in England and Wales. It forms part of the incorporation application and provides a structured snapshot of the company's issued share capital at the moment the company is created. It is governed by the Companies Act 2006 and related incorporation regulations, and it appears on the public register once the company is formed.
Its purpose is to present clear, standardised information about the company's share structure so that shareholders, creditors, and the public can understand how ownership is divided and what rights are attached to shares from day one.
Legal Basis and Role in Incorporation
When a company is incorporated, it must submit an IN01 application form to Companies House. The statement of capital is embedded within this form and is legally required for companies limited by shares.
It reflects the position of the company at the exact point of formation, meaning it does not show historical changes or future share issues. It is a statutory disclosure requirement designed to ensure transparency from the outset of a company's existence.
The requirement replaced older concepts of “authorised share capital” under reforms introduced by the Companies Act 2006 framework.
What the Statement of Capital Shows
The statement of capital provides a structured breakdown of the company's share capital. At incorporation, it typically includes the following elements:
1. Total number of shares issued
This shows how many shares exist in the company immediately upon formation. These are the shares subscribed for by the initial shareholders (known as subscribers).
It confirms the starting ownership structure of the company.
2. Share classes
If more than one class of shares is issued (for example, ordinary shares, preference shares, or non-voting shares), the statement must identify each class separately.
Each class is listed with its specific rights and characteristics.
3. Nominal (par) value of shares
Each share has a nominal value, often £1 or £0.01. The statement shows:
- Nominal value per share
- Aggregate nominal value of all issued shares
The aggregate nominal value is calculated by multiplying the number of shares by their nominal value.
This figure represents the company's issued share capital on a nominal basis rather than market value.
4. Amount paid up and unpaid
The statement shows whether shares are:
- Fully paid
- Partly paid
- Unpaid
This reflects how much shareholders have actually contributed at incorporation compared with what remains payable.
This information is relevant to creditor protection and company capital structure clarity.
5. Rights attached to shares (prescribed particulars)
Each share class must include “prescribed particulars” setting out rights relating to:
- Voting rights
- Dividend entitlement
- Capital distribution on winding up
These details explain what shareholders are entitled to in practical and legal terms.
Companies House requires clear wording and does not accept vague references to external documents such as the company's articles.
What the Statement of Capital Does Not Show
It is important to understand what is not included:
1. Individual ownership percentages
The statement does not directly show shareholding percentages in plain form, although these can often be inferred from the number of shares issued.
2. Shareholder identity alone
The statement of capital focuses on share structure. Details of shareholders (subscribers) appear separately in incorporation documents and the register of members.
3. Market value of shares
The document only reflects nominal value, not the commercial or market value of the company.
4. Future share changes
It does not anticipate future funding rounds, allotments, or restructures. It is a snapshot only.
Why the Statement of Capital Matters
Transparency for the public register
Companies House maintains the statement of capital on the public record, allowing third parties to review a company's basic ownership structure.
Legal compliance at incorporation
If the statement is incomplete or incorrectly drafted, Companies House may reject the incorporation application. This makes accuracy essential at the formation stage.
Foundation for future share changes
The incorporation statement becomes the baseline record. Any later share issuance, reduction, or restructuring must reference and update this capital structure.
Relevance for investors and lenders
Banks, investors, and counterparties often review the statement of capital as part of due diligence. It provides early insight into:
- Ownership distribution
- Share structure complexity
- Level of initial capitalisation
Common Errors at Incorporation
Frequent issues include:
- Failing to specify share rights properly
- Using vague wording (for example, “see articles”)
- Misstating nominal value or share classes
- Incomplete breakdown of issued shares
- Attempting to use “authorised share capital” concepts, which no longer apply
These errors can delay incorporation or result in rejection by Companies House.
Practical Interpretation of the Document
At incorporation stage, the statement of capital typically reflects a simple structure:
- One shareholder or multiple subscribers
- One class of ordinary shares in most small companies
- Minimal share capital (often low nominal value)
- Full or near-full paid-up status at formation
This makes it primarily an administrative and transparency document rather than a commercial valuation tool.
Key Takeaways
The statement of capital at incorporation is a statutory Companies House requirement that sets out the company's initial share structure at the moment of formation. It details the number and class of shares, nominal value, paid-up status, and the rights attached to each class.
It does not show market value or detailed ownership percentages in a standalone form but instead provides a legal snapshot of issued share capital. Its accuracy is essential because it forms the foundation for all future share transactions and appears permanently on the public register.
