Setting up an SPV (Special Purpose Vehicle) property limited company can be a smart move for anyone looking to manage their property portfolio in a more structured and tax-efficient way. However, before you dive into setting up your own SPV, it’s important to get a clear picture of what the process involves — particularly when it comes to legal requirements and the paperwork that comes with it.
In this article, we’ll walk you through what you need to know about set up SPV property limited company formation — from understanding the legal framework to ensuring you have the right documentation in place.
Legal Requirements for Setting Up a Property SPV
Before you can start purchasing property through your SPV, you’ll need to tick a few legal boxes. Here’s a breakdown of the steps involved:
1. Pick Your Company Name
The first thing you’ll need to do is decide on a name for your SPV. It needs to be unique, not too similar to any other company’s name, and ideally, it should give an idea of the nature of your business. Most property investors choose something that includes the word “property” or “investments”, but that’s entirely up to you. Just make sure the name complies with the rules set by Companies House.
2. Register the Company with Companies House
Next, you’ll need to register your SPV with Companies House. This process involves submitting your company details online, including:
· Your company name
· A registered office address
· Directors’ details (you’ll need at least one)
· Shareholder information (who owns the company and how many shares they have)
· Articles of Association (this is essentially the set of rules for running the company)
3. Appoint a Director
Your SPV must have at least one director. This can be you, but you can also appoint others if you prefer. The director is responsible for overseeing the day-to-day running of the business. As a property investor, you’ll likely take this role on yourself, but you could also bring in an external director if you feel it’s necessary.
The director must be someone who understands the responsibilities involved, as they will be accountable for making sure the company complies with all legal and tax obligations.
4. Shareholders and Share Capital
When setting up your SPV, you’ll need to decide on the share structure. As the owner, you’ll probably issue the majority of the shares, but it’s possible to have multiple shareholders if you want to bring in partners or investors. Shares represent ownership in the company, so it’s important to get this structure right from the start.
Key Documents You’ll Need
Once you’ve sorted out the basics, there’s a bit of paperwork to get through. These documents are crucial for keeping your SPV compliant and ensuring everything runs smoothly.
Articles of Association
This document lays out the rules for how your SPV will operate. It includes details about the rights of shareholders, how decisions will be made, and how profits will be divided. While you can use standard templates for property companies, you may want to tweak them to reflect your specific needs.
Memorandum of Association
This is a simple document that confirms that you and any other founding members want to form the company. It’s more of a formality, but still an essential part of the process.
Share Certificates
Once shares have been issued, you’ll need to issue share certificates. These certificates are legal proof of who owns the company and how much of it they own. It’s important to keep a record of this, as it can come in handy for tax reporting or if you ever decide to sell the company.
Director’s Service Agreement
If you’re the director of your SPV (which, in most cases, you’ll be), it’s a good idea to have a service agreement. This outlines your duties and responsibilities as a director, helping avoid any confusion down the line.
Registers of Shareholders and Directors
You must keep an up-to-date record of your company’s shareholders and directors. This is a legal requirement and should be kept in your company’s official register, which must be available for inspection.
