18: Company law the basics Flashcards
what are people who go about setting up a company called?
promoters
what are “registered companies”
companies that are incorporated under the Companies Act 2006
what is a memorandum of association
memorandom of association is a doucment signed by the shareholder that state they want to form a company and become members
what are the initial shareholders of a company called?
“subscribers”
for a company limited by shares or company limited by guarantee, what are the two statements needed respectively?
statement of capital, statement of guarantee
an application to form a public company must be accompanied by a …?
statement relating to the trading certificate
in the event of an incorporation of a company, will the company be able to commit criminal offences?
yes, the company will be able to commit actus reus.
can a company sue or be sued?
yes
a company is an entity or “____” through which a business may be carried on
vehicle
what are the 3 main types of companies that may be formed under the Companies Act 2006
- Unlimited companies
- Company limited by shares
- Company limited by guarantee
what type of company are charities, clubs and sporting associations generally?
companies limited by guarantee
does a company limited by guarantee have shareholders or share capital?
no
how is a company limited by guarantee different to that of a company limited by shares?
its members are guarantors of the company and their liability for the debts is limited to the amount they have guaranteed
does a company limited by guarantee have a juristic personality?
yes
if members of a company limited in guarantee does not own shares, what do they own?
a non-descript chose in action
can a member’s chose in action be sold in a company limited by guarantee?
yes
in a company limited by shares, the member’s liability is limited to …?
the amount of share capital they have subscribed for
major creditors may insist of taking personal guarantee from a director or shareholder to cover debts of the company. will the limited liability be lost in this case?
yes
a private company must have a minimum of: _ director(s) _ shareholder(s)
1 director and 1 shareholder
a public company must have a minimum of:
_ director(s)
_ shareholder(s)
+ …?
2 directors
1 shareholder
1 company secretary
a public company must have a minimum alloted share capital of £_____ with at least __% is paid up
50,000 with at least 25% paid up
which has generally subject to less regulation? private or public companies?
public companies
what does it mean when the term ‘lifting, or piercing the corporate veil’ is used?
this is when the limited liability in the ‘veil of corporation’ is ignored because of exploitation from the shareholder/director from criminal activities/ wrongdoing
what are the four main ways a company can change its status of a company?
- private company re-register to become a public company
- a public company to re-register to become a private company
- a public company to list its shares on a Stock Ex.
- a private company limited by shares may become an unlimited company
why would a private company want to re-register as a public company?
to offer its shares on the Stock Ex as a way to raise finance
for a private company to register as a public company, the members must approve of this change by means of a …?
special resolution
is there a process for companies limited by shares to become a company limited by guarantee?
no, you just transfer the assets from the old company to the new one. and dissolve the former structure
what do the articles of assocation include?
- shares
- shareholders
- dividends
- meetings
- directors
when might a company use bespoke articles, rather than model articles?
when the company has charitable purposes, or is a community interest company
can a company alter its articles?
yes
what are the conditions to a company altering its articles
at least 75% of the members voting have to be in favour of the alteration (special resolution)
is a shareholders agreement requirement for registration and incorporation of a company?
no
what is the difference between ordinary resolution and special resolution?
ordinary resolution = more than 50%
special resolution = 75% or more
generally, in a company limited by shares, how many votes per share?
1 vote per share, unless article says otherwise
how much notice is required for a company meeting?
at least 14 days notice
how much notice is required for an AGM?
at least 21 days notice
can a member appoint a proxy to attend and vote on behalf of them?
yes
how much notice is require for a board meeting?
reasonable notice
who can alter the companies articles
members only, by special resolution (75%+, 14 days notice)
james is a sole shareholder of a private company and would like to appoint billy, his son, as a director to join the business. billy is 15 years of age but james believes he is more than capable to become a director. can billy be a director?
no, the minimum age requirement is 16+.
can a company appoint a director which is a corporate body?
no
dont get this mixed up with a member, in which a corporate body can be a member - think groups
if a company would like to appoint three more directors, on year into being in business, what type of resolution must they pass?
subsequent directors are usually appointed by shareholders passing an ordinary resolution
if a director wants to retire, do shareholders need to pass an ordinary resolution?
yes
if a director wants to retire, shareholders need to pass an ordinary resolution?
how many days notice will this need to be?
28 days notice
a company can make a loan to a director but under what condition?
that shareholders pass an ordinary resolution
what are the three exceptions to the rules for making a loan to directors?
- business expenditure not exceeding £50k
- minor and business transactions not exceeding £10k
- intra-group transfers
if a special resolution is passed, this must be filed to Companies House within __ days of it being passed
15
Companies must keep sufficient accounting records. How long must a private company keep records for and how long must a public company keep records for?
private company = at least 3 years
public company = at least 6 years
Accounts must be filed with Companies House within _ months for a private company and _ months for a public company of the company’s accounting date
9 months for a private company
6 months for a public company
a company is a subsidiary of a holding company if:
4
- the holding company holds majority of voting rights
OR - the holding company is a member of the subsidiary and has the right to appoint/ remove directors
OR - the holding company is a member of the subsidiary and has the majority of voting right within the subsidiary
- the subsidiary is a subsidiary of a company
in tax law, is a group identified as a single entity or an individual corporate identity to each member of a grou
it is identified as individual companies
does a branch form a separate legal identity?
no
can you lift the veil on a group of companies?
yes
once a company’s constitution has been registered, which one of the following are true?
- the company and its members are contractually bound to each other
- the individual members are contractually bound to each other
True:True
True:False
False:True
False;False
True;True
‘forming a contract between the members and the company AND the members themselves’
