1. Setting Up/Constitution Flashcards
What are the 2 ways in which a company can be set up?
- Setting up a new co from scratch
- Purchasing existing shelf co
How is a co formed? s7 CA 2006
When it is incorporated, through the registration process
What is required when incorporating a co?
Preparation of documents and delivering them to companies house registrar
What are the key documents required to incorporate a co?
- Application for registration
- Memorandum of association
- Possible articles of association
What must the application for registration contain s9(1)CA 2006
- Statement that subscribers wish to form the co for lawful purposes s9(2)(e)
- The type of co being registered s9(2)(c) and (d)
- New co’s proposed name s9(2)(a)
- Address of new co’s registered office ss9(2)(b) and 9(5)(a)
- Statement of capital and initial shareholdings s9(4)(a)
- Statement of new co’s proposed officers s9(4)(c)
- Statement of initial significant control s9(4)(d)
- Statement of intended registered email address of the co s9(5)(aa)
- Copy of new articles of association s9(5)(b)
- Statement of compliance s9(1)
Which variations can a co take?
Private/public
Limited/unlimited
Ltd by shares or by guarantee
Are there any restrictions on company names?
- Co cannot be registered with the same name as one already appearing in the index s66(1) CA 2006
- Co must not use a name which amounts to a criminal offence or is offensive s53, CA 2009
- Not possible to use names associated with humanitarian organisations
Give the false impression of a connection to a foreign government or an international organisation s56A CA 2006
What is meant by the ‘same name’
Same name is not just one which is identical, but which would also be virtually the same but for the disregarding of simple elements
What must the co name end in ?
LTD or limited s59
What are the consequences of a co passing off their name as someone else’s?
May be liable in tort law- successful claim would lead to injunction or damages/account of profits
What happens if a co uses a name that has already been trade marked?
the holder of a trade mark may bring a claim against the co for trade mark infringement
Can the co choose a trading name different to that of its registered name?
Yes- Trading name helps with co branding to ‘strengthen, and modernise how it represents its worldwide network to its clients, its people and the communities in which it operates’
What must the co have according to s86?
A registered office
Why is a registered office required?
So that communications and notices may be sent
To keep co records
What is an appropriate address according to s86(2)
An address whereby - A document addressed to the co, and delivered there by hand or by post, would be expected to come to the attention of a person acting on behalf of the company; and
- The delivery of documents there can be acknowledged as delivered
- Usually where the co carries on its business (offices or factories); or
- Solicitor or accountant address ensuring legal and other important docs are received instantly
What is required when forming a co email address s88?
An email address, where in the ordinary course of events, emails sent to it by the Registrar would be expected to come to the attention of a person acting on behalf of the co
What must an application include? s9(4)(a)
statement of capital and initial shareholdings
What must the statement of capital include?
Total number of shares to be taken by the subscribes to the memorandum, total nominal value of those shares and the rights attaching to the shares
- Total amount unpaid on shares must be included
What is the point of having different classes of shares?
- Rights attaching to different classes of shares are different
- Typically, shareholders of preference shares will have no right to vote at shareholder meetings
What if a co wants to have more than one class of shares?
s10(2)(c) application form must include explanation of rights of each class, total number of shares of each class and total nominal value of each class
What are the rules for subscribers at first registration?
Each subscriber to the memorandum must take at lease one share in the co s8(1)(b) CA 2006
What is a person of significant control according to s790C and Sch1A
Any individual owning more than 25% of the shares/voting rights in the co or has the right to exercise significant influence or control over the co
What if there is no PSC on incorporation?
Statement to this effect must be made
What do directors do?
Manage the co on a day-day basis
Statement of compliance
Required on registration.
- ‘I confirm that the requirements as to registration under the Companies Act 2006 have been complied with’
- Each subscriber to the memorandum must make the statement (or an agent on their behalf) Part 10 on form IN01
What are articles of association?
The internal rules governing how the new co is to be run
- Set out how directors should take and exercise their powers
What are the 3 types of articles
Unamended model
Model articles with amendments
Bespoke
What happens after documents are filled out
Application for registration, memorandum and articles to be delivered to Registrar of Companies at CH with application fee s9(1) CA 2006
What happens after incorporation?
Certificate is issued s15(1) CA - Co is given a registered number (unique to the co and identifies the co throughout its life)
- Conclusive evidence that a co has been properly formed and duly registered s15(2) CA
- Limited liability begins s16(4)
Post-incorporation steps
First board meeting to decide on matters
What matters need to be decided upon at the first board meeting?
- Bank account in co’s name
Mandate form on who is authorised to sign cheques - Business name
- accounting reference dates
-Service contract - Co records
- Tax registration
- Insurance
- Disclosure of co details
- Shareholder agreements
What is an ARD
- Accounting reference date is the last day in the co’s financial year (ARD)- becomes the date to which the co must make up its accounts each year
- ARD usually the anniversary of the last day of the month in which the co was incorporated s391(4) CA 2006
- Co may wish to change ARD date (some may wish to align with the end of the tax year) → decision at the board meeting and file Form AA01 (change of accounting reference date)
Which form is required to change ARD
AA01
Why is a co auditor needed?
- All co’s must prepare accounts s394, CA 2006
- Many co’s will have to have the accounts audited (checked by an auditor) showing they have been prepared in accordance with applicable co law and accounting standards
