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Company Law > 1) Different Business Models > Flashcards

1) Different Business Models Flashcards

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1
Q

Different legal forms of business

A
  • Sole trader
  • Partnership
  • Limited partners
  • Limited liability partnership
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2
Q

Why businesses raise finance

A
  • Purchase premises
  • Employ staff
  • Obtain advice (oft accountants)
  • Expand and grow (by acquiring other businesses, marketing)
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3
Q

How businesses raise finance

A
  • Owners may invest in it by making contributions of capital
  • Outside investors may make capital contribution to the business to share in its profits.
  • Business may borrow money
  • Retention of profit.
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4
Q

Sole traders

A
  • No set up costs or formalities
  • Not a separate legal entity
  • Unlimited personal liability
  • No formal structure
  • No Companies House filing or procedural element
  • Complete privacy - no publicly filed accounts
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5
Q

Partnership - Overview

A
  • No set up costs
  • Not a separate legal entity
  • Unlimited personal liability
  • No CH filing
  • Privacy
    Governed by the provisions of the Partnership Act 1890
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6
Q

Partnerships - Formation

A
  • No formalities
  • There does not need to be intention - two or more people working together with the intention of creating profit = a partnership
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7
Q

s1(1) PA 1890

A

“…the relation which subsists between persons carrying on a business in a common view to profit”

No need for intention

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8
Q

Section 2 PA 1890

A
  • Rules for determining the existence of a partnership
  • Profits/losses shared = conclusive
  • Loan between partners
  • Property jointly held
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9
Q

Does a partnership exist

A
  • No one factor suffices - consider all the facts
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10
Q

Northern Sales (1963) Limited v Ministry of National Revenue (1973)

A

Agreement to share losses as well as profits = partnership more likely

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11
Q

Walker v Hirsch 1884

A

Clerk lent money to the partnership, was paid a fixed salary and took 1/8th of the profits/losses but **was never held out **as a partner.

No partnership found to exist.

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12
Q

Terms of Partnership

A

Nothing required in terms of formalities - advisable to have an agreement drawn up by a solicitor.

Otherwise partnership governed by the default provisions of the PA

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13
Q

Standard Clauses of the PA 1890

A

Section 24(1) Profits and Losses
Section 24(6) Renumeration
Section 24(8) Decision making
Section 25 Expulsion

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14
Q

PA 1890 Section 24(1)

A
  • Section 24(1) Profits and Losses
    Partners entitled to share equally in the profits of the business, share equally in the losses
  • Even if capital has been contributed unequally.

Recommend express provision of profit sharing ration

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15
Q

PA 1890 Section 24(6)

A

Renumeration

Partners are not entitled to a salary

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16
Q

PA 1890 Section 24(8)

A

Decision making

Decisions arising during the ordinary course of the business are decided by a majority.
Except for any change to the nature of the partnership business which requires unanimity.

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17
Q

PA 1890 Section 25

A

Expulsion
A partner cannot be expelled by majority vote unless all partners have previously expressly agreed a majority can do this.

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18
Q

Partnership Agreements

A

Can be varied by unanimous consent (s19 PA)

Legal advice recommended.

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19
Q

Sleeping Partners

A

Not involved in the management of the business.

Limited liability unless become involved in business

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20
Q

General Partners

A

Run the business and have unlimited liability

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21
Q

Limited Partnerships - Overview

A
  • At least one limited and one general partner
  • Governed by the Limited Partnership Act 1907
  • Must be registered at Companies House,
  • but have no requirement to file accounts.
  • Not commonly used for general business - usually used for investment vehicles.
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22
Q

What structure is usually used for investment vehicles?

A

Popular** joint venture business structures** where an investor (limited partner) puts money into a business run by the general partner.

Subcategory of private fund limited partnership also created.

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23
Q

Limited Liability Partnership - Key Characterstics

A
  • LLPs were introduced by the LLP Act 2000
    **Separate legal personality. **
    Treated as a partnership for tax purposes.
    All partners has limited liability - limited to the amount that they have agreed to pay under the terms of their Partnership Agreement
    Registered at CH in the same way as companies
    Required to file annual accounts
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24
Q

LLPs are in effect a hybrid

A

Between a traditional partnership (procedural flexibility) and a company (with limited liability).

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25
Q

Companies Key Characteristics

A
  • Separate legal entity
  • Limited liability - the liability of shareholders is limited to the amount unpaid on their shares
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26
Q

Key considerations in choosing a business model

A

Costs
Risk
Structure
Formalities
Privacy
Finance

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27
Q

Companies - key charateristics

A
  • Separate legal entity
  • Limited liability - limited to the amount unpaid on their shares
  • Governed by Companies Act 2006
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28
Q

Shareholders /Members

A
  • Owners of the company
  • Invest money
  • Receive dividends
  • Have voting rights
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29
Q

Subscribers

A

Name given to the first shareholders in a company who invest.

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30
Q

Directors

A

Officers/managers of the company
Day-to-day running
= The Board
Often shareholders

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31
Q

Persons with Significant Control

A

Must be provided to Companies House

Shareholders with over 25% of shares

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32
Q

Other stakeholders

A

Anyone interested in the company such as employees or creditors.

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33
Q

Companies Act 2006

A

Replaced Companies Act 1985.
* Removal of the requirement of private companies to hold AGM or submit Annual Returns.
* Codification of directors’ duties
* Allowing private companies to pass shareholders resolutions in writing

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34
Q

Private Limited Company

A

Section 4(1) CA 2006
“a private company is any company that is not public”

Name ends with Ltd (s59(1)

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35
Q

Types of Private Companies

A
  • Limited by shares
  • Limited by guarantee
  • Unlimited companies
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36
Q

Limited by shares

A
  • Most common type of company
  • No minimum share capital
  • Prohibited from offering shares to public
  • Can be formed by one person
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37
Q

Limited by guarantee

A
  • No share capital
  • Liability limited to the amount that they agreed to contribute in the event of winding up.
  • Membership non-transferable
  • Rare companies
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38
Q

Unlimited companies

A
  • The liability of members is unlimited
  • Rare type of company
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39
Q

Public Limited Company

A
  • section 4(2) CA 2006
  • “company whose certificate of incorporation states that it is a public company”
  • Ends plc
  • Can offer shares to public eg LSE
  • More onerous requirements
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40
Q

Public Companies limited by shares

A

plc
* Minimum of 2 directors
* Minimum share capital requirement of £50k (s763 CA 2006)
* Requires a trading certificate before it can trade (s761)

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41
Q

Listed companies

A
  • Only public companies can be listed.
  • Not all companies are
  • Listed means admitted on a regulated investment exchange
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42
Q

Reasons to list a company

A
  • Raise greater funds
  • Stock exchange listing allows investors to deal freely.
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43
Q

Should not assume that a company whose name ends in “plc” is….

A

Should not assume that a company whose name ends in “plc” is a listed company.

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44
Q

Differences between private and public - NAME

A

Plc v Ltd

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45
Q

Differences between private and public - SHARE CAPITAL

A
  • Private: No specific minimum share capital (eg £1)
  • Public: Nominal value of at least £50k, at least 1/4 must be paid. (s586 & s763 CA 2006)
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46
Q

Differences between private and public - DIRECTORS

A

Private: Need only have one director

Public: Need to have two directors (s154 CA 2006)

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47
Q

Differences between private and public - COMPANY SEC

A

Private: May choose to have a CoSec S270(1)

Public: Must have a CoSec s271. Must hold one of the qualifications specified s273(2)

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48
Q

Differences between private and public - AGM

A

Public: Required to have one AGM per year s336
= Opportunity to question directors and finances.
Private: Not required to hold an AGM, may do if wish.

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49
Q

Company’s Constitution

A

Made up from the following docs:
- Memorandum
- Articles of Association

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50
Q

Constitutional Docs following CA 2006

A
  • Memorandum no longer forms part of the company’s constitution
  • Only required as part of the procedure for Companies House
  • = declaration that subscribers want to form a company
  • s17 CA
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51
Q

Memorandum Under Companies Act 1985

A
  • Constitutional restrictions
  • Object clause = the purpose of a company
  • Acting outside the company’s purpose = ultra vires
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52
Q

Companies formed under CA 2006 - objects

A

Have unrestricted objects (s31 CA), unless specifically restricted in the company’s

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53
Q

For companies incorporated under the CA 1985

A

s28 CA 2006
Any provisions m in the memorandum to be treated as Company’s Articles

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54
Q

For companies incorporated under the CA 1985
- OBJECTS

A

The Objects Clause continues in force as an Article, until Articles amended to remove clause
s28 CA 2006

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55
Q

Articles of Association

A

s18
= main constitutional document.

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56
Q

Legality Test

A

Articles must comply with the minimum provisions of CA 2006

Check whether procedures set out in the relevant legislation and in Articles

Certain provisions cannot be overidden. Eg Right to demand a poll s321 CA

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57
Q

Three choices as to form of Articles

A
  • Model Articles / Table A
  • Amended MA
  • Tailor made Articles
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58
Q

Model Articles /
Table A

A
  • SoS prescribed MA for different companies s19
  • MA will be default if no Articles registered s20(1)
  • 1985 = Table A
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59
Q

Amended MA

A
  • Adopt the MA and elect/exclude/modify certain ones
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60
Q

Tailor Made Articles

A
  • Eg law firms
  • But time consuming and costly to do.
  • Most small companies adopt MA
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61
Q

Amending the Articles

A
  • Alter them by special resolution (s21(1))
  • Entrenchment possible by rare (s22) - can only be repealed if conditions met, all members agree, or court order.
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61
Q

Entrenched Articles

A

Amended only by
* Conditions being met
* Agreement of all members
* Court order (s22(3))

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61
Q

Basic case law rule for amending articles

A

To be valid any alteration must be made bona fide in the interests of the company as a whole.
Allen v Gold Reefs (1900)

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62
Q

Allen v Gold Reefs (1900)

A

To be valid any alteration must be made bona fide in the interests of the company as a whole.

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63
Q

Shuttleworth v Cox (1927)

A

An amendment to the Articles is not valid if no reasonable man could consider it to be for the benefit of the company.

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64
Q

Sidebottom v Kershaw 1920

A
  • Fair price buy out provision for competitors
  • CoA initiated in good faith and bona fide interests of the company
  • Allowed to stand to protect the company.
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65
Q

Re Charterhouse Capital Ltd 2015

A
  • Amendment of articles to permit the shares of minority shareholder to be compulsorily acquired
  • Held to be valid as consistent with shareholders agreement = “tidying up exercise”
  • Not in bad faith, no improper motive = no basis for challenge
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66
Q

Legal effect of Articles

A

s33(1)
* Articles bind as a covenant.

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67
Q

Predecessor to s33(1) CA 2006

A

s14 CA 1985
Much case law
Est rule = Articles evidence a contract between company and members

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68
Q

Hickman v Kent or Romney Marsh Sheep-Breeders’ Association 1915

A

Est rule = Articles evidence a contract between company and members in their capacity as members and with respect to their rights and obligations as members.

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69
Q

Articles as contract

A
  • Between company and members
  • Courts have been willing to intercede with an injunction
  • Member may not enforce rights contained in the Articles against the company that are not relevant to their capacity
  • Members would be able to enforce right to vote, and dividend after declaration (s33)
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70
Q

Member may not enforce any rights….

A

Member may not enforce any rights contained in the Articles against the company that are not relevant to their capacity as a member

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71
Q

Members’ rights enforceable under s33 CA

A
  • Right to vote
  • Right to receive a final dividend.
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72
Q

Eley v Positive Government Security Life Assurance Company
1876

A
  • A member who inserted the right for him to be employed for life as company’s solicitor
  • could not enforce the provision
  • not a right held in capacity as a member , rather as the solicitor
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73
Q

Articles as a contract between members

A
  • Articles = contract between members and between company and members
  • Conflicting authority as to whether one member may enforce Articles against another member directly
  • or through the company itself
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74
Q

Members enforcing against members - CASES

A

Rayfield v Hands 1960
vs
Welton v Saffery 1897

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75
Q

Rayfield v Hands 1960

A
  • If members accept personal obligations to another member through the Articles (eg transfer shares)
  • Then can directly enforce
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76
Q

If members accept personal obligations to another member through the Articles

A
  • If members accept personal obligations to another member through the Articles (eg transfer shares)
  • Then can directly enforce
  • Otherwise through the company.

Rayfield v Hands 1960

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77
Q

Welton v Saffery 1897

A
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78
Q

If a member is likely to wish to enforce rights against other members……

A

They should be advised to enter a shareholders agreement

79
Q

A Shareholder’s Agreement

A

A private agreement between the shareholders which is enforceable as a contract between the members.

80
Q

Memorandum since 2006

A
  • Was of constitutional significance
  • But in companies incorporated since CA 2006 = a formality
81
Q

Main constitutional document

A

Articles

82
Q

Articles bind

A

The Articles bind the company and its members

As if covenants on the part of the company and each member

83
Q

Articles must always be interpreted …

A

Articles must always be interpreted alongside CA 2006

84
Q

Formation of a company

A
  • Incorporation from scratch
  • Shelf company conversion
85
Q

Incorporation from scratch - HOW

A

Submitting relevant info to CH / online

86
Q

Shelf Company Conversion - HOW

A

Purchase of shelf company followed by any formalities to enable necessary changes

87
Q

Incorporation from scratch

A
  • Made to the Registrar of CH
  • Ensures tailor made to needs.
  • section 9 CA 2006
88
Q

section 9 CA 2006

A

To be delivered to the Registrar of Companies at CH
* Copy of Memorandum
* Articles
* Fee
* Application for registration (Form IN01)

89
Q

Application for registration

Form IN01

A
  • Company’s name; Registered office; Appropriate address; Liability / limited or not; private or public
  • Statement of capital and initial share holding
  • Proposed officers
  • limitation
  • Statement of compliance
  • lawful purpose
  • registered emails
90
Q

Form IN01 covers

A

s10 - s13 CA 2006
What to include un the application

91
Q

s10 CA 2006

A

Statement of capital and intiial share holdings

92
Q

s12 CA 2006

A

Statement of proposed officers.
Enauk

93
Q

s11 CA 2006

A

Statement of whether company is to be limited by guarantee, and what of the guarantee

94
Q

s13 CA 2006

A

Statement of compliance with the CA 2006

95
Q

Company becomes a legal entity from

A

Company becomes legal entity (s16(3)) from the date of incorporation set out in the certificate of incorporation (s15)

96
Q

Summary of submission to CH

A

Memorandum
Articles
Form IN01
Fee

97
Q

Purchase a shelf company

A

Traditionally more common as was quick.
Changing since online incorporation

98
Q

Shelf company

A

Set up in advance
Many firms operate in-house service

99
Q

Shelf company advantage

A

Available all the time on every day of the year, online CH only during opening hours

100
Q

Likely a client would make changes to the Shelf Company

A
  • Name
  • Articles
  • Reg Office
  • Confirmation statement
  • Members, directors and Co-Dec
101
Q

ECCTA 2023

A
  • Economic Crime and Corporate Transparency Act 2023
  • Introduced the need for a company to have a lawful purpose recorded at CH
  • Increased fees payable on certain filings.
  • further changes will be introduced.
102
Q

Changes that will take effect through ECTA 2023

A
  • Verification of identity of directors or persons filing
  • Limitations on who can make CH filings
  • Reg of Authorised Corporate Service Providers
103
Q

Stakeholders in a company

A
  • Shareholders
  • Directors
  • Persons of significant control (over 25% usually)
104
Q

Shareholders

A
  • Owners of a company
  • Shareholders = members
  • Shareholders invest money (share capital) in return for ownership
  • Rights are in the Articles
105
Q

Shareholder Certificate

A

Evidences ownership of a company.

106
Q

Shareholders rights

A
  • Voting
  • Dividend
    etc
    Set out in the Articles
    Sometimes in a Shareholder Agreement
107
Q

Membership begins

A

Membership begins when member’s name is entered into company’s register of members
(s112(2) CA 2006)

108
Q

Subscribers

A

First shareholders of the company are shareholders
section 8

109
Q

Subsidiary of company

A

When a company owns all the shares in another company = a wholly owned subsidiary of company

110
Q

A share is described

A

As a “bundle of rights”

111
Q

Shares Overview

A
  • Can issue different classes - see company’s Articles
    eg ordinary, nominal par, issued, paid up etc….
112
Q

Ordinary share

A
  • Entitle holder to vote
  • Receive a share of profits
  • Receive share of surplus assets of a company if it is wound up.
113
Q

Nominal Value

or par value

A

Minimum subscription price for that share.

Share may not be allotted/issued for less than nominal.
May be issued for a premium.

114
Q

Premium

A

An excess over nominal value

115
Q

Issued share capital

A

Total amount in value (nominal and premium) of all shares in issue at any time.

Will be shown in company’s account.

116
Q

Paid-up share capital

A

Not always necessary to pay the full amount due on their shares.
The amount paid = paid-up share

117
Q

Called-up shares

A

Not always necessary to pay the full amount due on their shares.
The amount to be paid once demanded = **called*

118
Q

Share capital

A
  • Shares purchased by the first members (subscriber shares)
  • Further shares issued after incorporation to new or existing shareholders.
119
Q

Allotment

A

Allotted when a person acquires unconditional right to be included in the company’s register of members in respect of those shares.
s558 CA 2006

120
Q

Issued

A

Shares are only issued and form part of a company’s issued share capital, once the shareholder has been registered in the company’s register of members and her title as complete.

121
Q

Different classes of share

A

There may be two classes of ordinary share - maybe carrying different voting rights.

May also be preference shares

122
Q

Preference Shares

A

Entitles holder to a preferential right
* First claim to a dividend
* Return of capital on winding up

123
Q

Limited Liability

A

Total nominal value of the shares held by a shareholder is equal to the total amount of that** shareholder’s liability** to contribute to the assets of the company if it becomes insolvent.

124
Q

Shareholders Liability

A

Limited
If shareholder’s shares are fully paid, he will not have to contribute anything further in the amount of insolvency

125
Q

Persons with Significant Control

A
  • Owns more 25% of the shares of voting rights.
  • Power to appoint or remove a majority of its board of directors; OR
  • Otherwise exercises “signficant influence or control”
126
Q

Registration of PSC

A

PSC register is required to be open to the public for inspection.
Intended to combat tax evasion etc.
s790A - 790ZG CA 2006

127
Q

Directors

A

Day-to-day management of the company.
Agents of the company - governed by statute and common law principles of agency.
Owe fiduciary duties

128
Q

Making changes to company’s Articles

A

Can only be done by shareholders, not directors.
s21 CA 2006

129
Q

s154 CA 2006

A
  • A private company > one director
  • A public company > two directors.
  • At least one director must be a natural person
130
Q

Minimum age for directors

A

Minimum 16
s157 CA2006

131
Q

Gov legislation re: company directors

A

Gov has enacted legislation that all corporate directors must be natural persons (subject to some exceptions)
Date of implementation not confirmed

132
Q

Types of director

A

Executive; Non-executive; Shadow;
De facto; Alternate.
All these types of directors owe the same duties to the company, are under the same obligations (CA 2006, Insolvency Act 1986)

133
Q

Executive Directors

A
  • Appointed to Executive office
  • Spend their working time on the business.
  • Both officer and employee
134
Q

Non-Executive Directors

A
  • Also an officer of the company
  • Not be an employee of the company
  • Independent guidance
  • Protect interest of shareholders
135
Q

Shadow director

A

Person in accordance with directions/instructions the directors of the company are accustomed to act s251 CA 2006

Not consultant if in professional capaciy and scope s251(2) CA 2006

136
Q

Alternate directors

A

Acts in the actual director’s place if incapacitated, or otherwise engaged.

May be provided for in the Articles

137
Q

De facto directors

A

Not a legal director who has been validly appointed = assumes the role

138
Q

Appointment of directors under CA 2006

A
  • Governed by Articles
139
Q

Appointment of directors under Model Articles

A
  • By ordinary resolution of the shareholders, or;
  • By decision of the directors.
    Art 17(1)
140
Q

Directors’ Service Contracts

A

Article 19
The terms of an individual director’s service contract are for the board to determine.

Long term service contracts may require shareholder approval.

141
Q

Long term service contract

A

s188 CA 2006
Applies if longer than 2 years.
* Requires shareholder approval.
* If approval not given, then void under s189(a)
A term also included under s189(b) entitling the company to terminate the contract at any given time.

142
Q

s189(b) CA 2006

A

A term also included in the service contract it is deemed to contain a term entitling the company to terminate the contract at any given time.

143
Q

Shareholders are the …… of the company

A

Shareholders are the owners of the company.

A company can itself by a shareholder of another company.

144
Q

A company may have different ….

A

A company may have different classes of shares

145
Q

The rights attaching to each class of shares will be set out….

A

The rights attaching to each class of shares will be set out in the Company’s Articles

146
Q

Directors are….

A
  • agents of the company.
  • responsible for day-to-dau management.
147
Q

Decisions of directors

A

Decisions of directors are taken by passing board resolutions in board meetings.

148
Q

Decisions of shareholders

A

Shareholder resolutions.
Either in a General Meeting or in Writing.
* Ordinary resolutions
* Special resolutions.

149
Q

Procedure for passing a board resolution at a Board Meeting

A

Article 7(1) Model Articles
* Majority
* In the event of a deadlock Chairperson casts vote (Art 13 MA)

150
Q

Chairperson of the Board

A

Article 12 Model Articles
* Chairperson is chosen by directors
* Has casting vote.

Amend Articles to remove chairperson if only two as otherwise they can make decisions alone

151
Q

Quorum necessary for a valid BM

A
  • Number of people required to attend a meeting for it to be valid
  • Valid meeting = quorate
152
Q

Quorum

A

Number of people required to attend a meeting for it to be valid

153
Q

If a quorum is not participating

A

No proposal may be voted at a Board Meeting
Article 11 Model Articles

154
Q

Art 11(2)

A

Quorum for a directors’ meeting may be fixed from time to time by a decision of the directors.
* Can never be less than two
* Unless otherwise fixed = two

155
Q

Unanimous decision of the directors

A

Art 8 Model Articles
Provision for directors to make decisions unanimously without a BM.
* Decision requires all directors to indicate a common view “by any means”.
* Written record required Art 15

156
Q

Preferred decision making method

A

Easy to hold a Board Meeting under the Model Articles.

Practice the preferred procedure for decision making.

157
Q

Companies with one director

A

Sole director can take decisions on their own

Art 7(2)

158
Q

Example of decisions that cannot be made by directors without authorisation from shareholders

A
  • Changes to the company’s constitution
  • Approval of certain transactions between company & directors
  • Formal declaration of dividends.
159
Q

Types of shareholder resolution under CA 2006

A
  • Ordinary resolutions
  • Special resolutions

Ordinary resolution sufficient unless Articles require a higher majority (s281(3))

160
Q

Ordinary Resolution

A

A resolution passed by a simple majority **(more than 50% of votes in favour)

s282(1) CA 2006

161
Q

Special Resolution

A

Majority not less than 75%

s 283(1) CA 2006

162
Q

Hands or Poll

A
  • Hands = 1 vote per shareholder
  • Poll = 1 vote per share held
    c 284 CA 2006
163
Q

Right to demand a poll vote

A

s321 CA 2006 sets out the conditions.
May be relaxed by the Articles (eg Art 44 MA)

164
Q

Right to appoint a proxy

A

Entitled to appoint a proxy s324 CA 2006

165
Q

s318(2) CA 2006

A

Two qualifying persons required for a GM

166
Q

s323 CA 2006

A

Provides that if a corporation is a member if a company, by resolution authorises a person to act as representative at any meeting.

167
Q

Signle member companies GM

A

One qualifying member = a quorum for a GM
318(1), CA 2006

168
Q

Written resolutions

A
  • May pass a resolution without a GM through written procedure
    s288 CA 2006
169
Q

Two resolutions that may not be passed as written resolutions

A

s288(2)

  • Removal of a director s168
  • Removal of an auditor under s510
170
Q

Majority in written resolutions

A

Counted out of all shareholders entititled to vote, rather than those present

171
Q

Art 9 Model Articles

A

Gives directors flexibility in regulating their meetings, providing that any director may call a BM or require CoSec to do so.

172
Q

Browne v La Trinidad 1887

A

Court held that reasonable notice for a Board Meeting was necessary.

Depends on context what is reasonable

173
Q

Quorum

A

Directors may not validly make a decision on company business unless a minimum number of directors entitled to voteare present.

174
Q

Art 11(2) Model Articles

A

Minimum of two directors to be present tfor the meeting to be quorate
(unless the articles provide otherwise

175
Q

Matters to be referred to shareholders

A
  • Matter outside the powers of the directors
  • Matter within power of directors but requires the prior approval of the shareholders
176
Q

Section 307 CA 2006

A

Prescribes minimum notice periods for General Meetings

Minimum 14 clear says’ notice

177
Q

General Meetings of Shareholders

A
  • Minimum of 14 days notice
  • Must inform shareholders when and where it is taking place * written notice to the shareholders.
  • Directors must approve the form of notice of the GM and authorise circulation.
178
Q

Notice

A
  • Mean a period of time, or;
  • A document
179
Q

After a GM has taken place

A

A second BM will be necessary, to enable the directorsto implement t

180
Q

Sequence of meetings

A

BM - propose change/convene GMM
GM - Shareholder approval
BM - Implement decisions
PMM - Post Meeting Matters

181
Q

Short Notice GMs

A
  • Can be called on at shorter to usual amount of short notice if sufficient members agree.
  • May be called on short notice if this is agreed by a majority - ie not less than 90% nominal value of shares.
    Section 307 (5) CA 2006
182
Q

Post Meeting Matters

A

The post-meeting matters will be carried out by the CoSec (or director).
This means that copies of the relevant documents will be filed at CH and internal records brought up to date.

183
Q

Art 8(2) Model Articles

A

Allows directors to take decisions in the form of a directors’ written resolution provided the prescribed procedure is followed.

Uncomment in practice

184
Q

s281 CA 2006

A

Only private companies may pass a shareholders’ resolution by way of a written resolution

185
Q

s282 CA 2006

A

A written ordinary resolution can be passed by a simple majority of the total voting rights of eligible members

186
Q

s283 CA 2006

A

state that a written special resolution can be passed by a majority of members representing not less than 75% of the total rights of eligible members

187
Q

s284 CA 2006

A

Where a company has a share capital, every member has one vote in respect of each share held by them when voting on a written resolution

188
Q

s288 CA 2006

A

Provides that resolutions to remove a director or auditor from office may not be passed by way of written resolutions

189
Q

Post-Meeting
Dealing with documentation - RESOLUTIONS

A
  • Copies of all resolutions must be sent to the Registrar Companies within 15 days
190
Q

Post-Meeting
Dealing with documentation - SPECIAL RESOLUTIONS

A
  • Must be filed as form part of the Constitution
    ss17(B) and 29(1)(a)
191
Q

AMENDED ARTICLES

A

Copies of amended articles must also be filed
s26(1) CA 2006

192
Q

DIRECTORS

A

Will be responsible for updating the statutory books

193
Q

Why is it important to follow the correct procedures?

A

Resolutions may be invalid.

194
Q

Criminal Sanctions

A

248(3) and 4 CA 2006
If a company fails to record minutes of meetings in the relevant statutory books, every officer in default is liable to a fine,

195
Q

Default rules governing LLP in absence of Membership Agreement

A

**s7 and 8 of LLP Act 2000*
* Share capital and profits equally
* LLP indemnify partners for payments and liabilities incurred in ordinary course of business
* Every member may take part in management
* No entitlement to renumeration
* Cannot assign membership without consent
* Majority rule in ordinary matters; change to nature of business requires unanimous consent.
* No power of expulsion unless separate Membership Agreement

196
Q
A

Company Law (11 decks)

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