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Aipedia: Company formation and secretarial agents
An AI chatbot on a formation platform can answer questions about company types, shares and SIC codes, but if customers rely on its answers the platform may be treated as advising them. That can create liability the platform never planned for.
Part of: AI in Company formation and secretarial agents
In short
Online formation platforms use AI chatbots to help customers choose between a private limited company, an LLP or another structure, decide how many shares to issue, pick SIC codes and understand filing duties. Many customers are consumers or first-time founders who rely on what they are told. A confident wrong answer about structure, shares or deadlines can cause loss, and the platform owes reasonable care and skill under the Consumer Rights Act 2015 or the Supply of Goods and Services Act 1982. PI may respond to resulting claims, subject to the wording and to advice being a declared service.
Online formation has always relied on guidance text and package options. Generative AI chatbots now sit alongside them, and they typically do the following:
The chatbot's answers are fluent and personal. To a customer, that can feel like advice from an expert rather than general information.
There is no bright line, but a chatbot is more likely to be treated as advising when it responds to the customer's own facts, recommends a specific option and the customer has no reason to check elsewhere. The platform owes reasonable care and skill: under section 49 of the Consumer Rights Act 2015 for consumers and section 13 of the Supply of Goods and Services Act 1982 for business customers. Disclaimers help but have limits, particularly with consumers.
If a chatbot refuses a customer or steers them away automatically, UK GDPR rules on solely automated decisions in Articles 22A to 22D, in force from 5 February 2026 under the Data (Use and Access) Act 2025, may also be relevant. Chatbots should also give accurate information about identity verification, which has been a legal requirement for directors and PSCs since 18 November 2025.
The wider rules that apply to formation platforms are summarised in AI in company formations: rules, risks and PI.
Illustrative scenario: two founders ask a formation platform's chatbot how to split ownership so that one can bring in investors later. The chatbot recommends a single class of shares split equally and says identity verification can be done at any time. A year later, deadlock between the founders stalls the business, and an investor's due diligence reveals that one director was never verified. The founders complain that they followed the platform's recommendations and ask it to pay the legal fees to restructure.
Other errors include SIC codes that misdescribe the business to banks, wrong statements about filing deadlines and structure suggestions with tax consequences the chatbot never mentioned. Structure choices feed into the drafting covered in AI-drafted articles and shareholder agreements, and name questions into AI company name and trade mark checks.
A customer's claim that a chatbot gave negligent guidance is a professional liability claim, and PI may respond if advice and online guidance are within the declared services, subject to the wording. Many formation agent policies were written for filing and secretarial work, so a platform that has added an AI chatbot should tell its insurer and check how its business is described.
Defamatory or infringing chatbot output, data protection failures and technology errors raise separate questions; see AI chatbot insurance, does PI cover AI mistakes? and does formation agents' PI cover AI errors?.
These steps keep a formation chatbot on the right side of the line:
Apex arranges PI for online formation platforms. A broker reviews how your policy describes chatbot guidance and whether your declared services match what customers actually receive.
It can be, depending on what it says and how customers use it. A chatbot that responds to a customer's own circumstances with a specific recommendation is closer to advice than one that sets out general options and points to official guidance.
They help set expectations but have limits, especially with consumers, whose statutory right to reasonable care and skill is hard to exclude. Designing the chatbot to inform rather than recommend is more reliable than relying on a disclaimer.
It may, if the chatbot's guidance falls within the declared professional services. Many formation agent policies focus on filing and secretarial work, so platforms adding AI chatbots should tell their insurer and check the wording.
It can suggest them, but the customer should check that the codes describe what the business actually does. Banks, lenders and others may rely on the register, so a misleading code can cause problems later. A final review by the customer or a person before filing helps.
Tell us about your firm and the work you do. A broker will review how your current PI treats AI-assisted work, or arrange new cover. No fee for a quote. Or call 0117 325 0027.
Start a PI quote Request a callbackApex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information about how AI is used in the profession and how insurance may respond. It is not legal, regulatory or insurance advice on your circumstances, and it does not guarantee that cover will be available or on what terms.
