2) Companies Act Flashcards
when is an individual related to a juristic person?
when it controls the JP, either directly or indirectly
when is a JP related to another JP?
if one controls the other or an individual controls both (directly or indirectly)
when does a person have control over a JP?
- majority voting rights in the company
- right to appoint/elect the directors who control a majority of the votes
when does a company satisfy the solvency and liquidity tests?
- A > L
- if it appears that the company will be able to repay its debts when they become due for 12 months after test is considered
accounting records must be?
- accurate, complete
- official language of the Republic
- accessible from office
offenses for accounting records?
(with intention to mislead/deceive)
- fail to keep accurate complete records
- keep them other than in prescribed form
- falsify records
financial statements must?
- satisfy FR standards
- present fairly company affairs
- have date they were produced
- must include info about if they have been audited on first page
financial statements must not be?
- materially false/misleading
- materially incomplete
what are the requirements for annual FS?
- annually, within 6 months of financial year
- be audited or independently reviewed
which reports must AFS include?
- auditor’s report
- director’s report
who must approve AFS?
signed and approved by an authorized director
if company is required to audit AFS, what must they show?
- remuneration
- pensions paid
- number and class of securities
what does the BOD do?
- manage company affairs
- exercise all powers / perform functions of the company, except where the MOI says otherwise
composition of BoD?
- 1 for private or PLC
- 3 for public, non-profit
(MOI can specify more, not less; void if less)
who in the BOD must the SH elect?
50% of directors and 50% of alternates
when can an individual not / no longer be ex officio?
- ineligible / disqualified
when does a person become a director?
- appointed and elected according to s66
- delivers written consent note
what are the requirements for election of directors for profit companies in s68?
- elected by those entitled to exercise voting rights
- director must accept election in writing
what if a director becomes delinquent / ineligible?
cease immediately to be a director
a person is ineligible to be a director if?
- juristic person
- unemancipated minor
- does not satisfy MOI qualification
a person is disqualified from being a director if?
- delinquent
- unrehab insolvent
- removed from office of trust for misconduct/dishonesty
- prohibited by public regulation
- convicted for theft/fraud
when does disqualification end?
- five years after removal
- at end of extension
what are the standards of director’s conduct?
- good faith
- best interest
- degree of care, skill, diligence
- not use position/info to gain personal advantage or knowingly cause harm to company
what must directors do if info comes to their attention?
communicate info the board, unless:
- immaterial, available to public
- bound by legal obl / confidentiality
can a disqualified person still act as a director?
if they hold all the shares in the company
when would a director satisfy the s76 obligations?
- they have taken reasonably diligent steps to become informed about the matter
- no personal financial int (nor did they know a related person had one)
- complied with s75
- supported board decisions only if they believed it was best interests of the company
after how long may proceedings to recover loss not be allowed?
more than 3 years after the act
what will the liable person(s) be required to pay?
- legal costs of all parties (unless abandoned)
- restore to company any amount improperly paid by company
can a director be relieved of liability?
yes, if liable but was honest/reasonable or if it is fair
what is the MOI?
the document that sets out the duties and resp of SH and directors
what are the requirements for a rule made by the company that was not addressed in the MOI?
must be consistent with both the MOI and the Act
when does the company rule take effect?
the latter of:
- 10 business days after publishing
- a date specified in the rule
when will the rule be binding on an interim basis?
from the time it takes effect until it is put to vote at the next SH meeting
when will the rule be binding on a permanent basis?
when it is ratified in the SH meeting
between who is the MOI and company rules binding?
- company and SH
- among SH
- company and board/comm members
when may the MOI be amended?
- in compliance with court order
- proposed by at least 10% voting rights and approved by special resolution and adopted at next SH meeting
what must a profit company do if it changes its category?
also change its name to reflect the change
how many SH are needed to propose a resolution?
2
what is required for the proposed resolution?
- sufficient clarity and specificity
- be accompanied by sufficient info to allow SH to determine should participate and vote
what is the process if SH believes that the resolution being passed does not satisfy the requirements?
anytime before start of meeting where res will be considered, SH may seek leave to apply for a court order restraining the company from putting it to vote until all requirements are met. it will also require the company / SH who proposed it to alter it so that requirements are met and compensate the applicant for cost of proceedings.
can a resolution be challenged once it has been approved?
no, not on the grounds that it did not satisfy requirements
can the MOI permit a lower % for special resolution?
only allowed if there is a margin of at least 10% between ordinary and special resolution
when may the board authorize financial assistance for security subscription?
- if part of employee share scheme / due to special resolution within the 2 previous years
- the board is satisfied that the company will satisfy the S&L test immediately after and terms are reasonable and fair to the company
(UNLESS MOI SAYS OTHERWISE)
when will a financial assistance decision be void?
- if the provision is inconsistent with the Act
is there director liability for financial assistance?
if present at meeting, failed to vote/against despite knowing…
what may financial assistance/loans not be granted to a director for?
if it is for:
- advance payment to meet legal expenses in relation to a matter concerning the company
- expenses relating to if they are being removed at company’s request
what are the requirements before the board can approve financial assistance/loans to a director?
- if part of employee share scheme / due to special resolution within the 2 previous years
- the board is satisfied that the company will satisfy the S&L test immediately after and terms are reasonable and fair to the company
- provide written notice of resolution to all SH and to any trade union representing its employees
which companies is it compulsory for to have a social and ethics committee?
SOC, listed public, company with PIS > 500 in two of the last 5 years
who may the auditor not be?
- PO/director/secretary
- regular accountant/bookkeeper
- person who maintains the FS
- any person who did these in the previous 5 years or a related person thereof
how often must auditors be rotated?
cannot be auditor for more than 5 years
if the auditor serves for more than 2yrs then ceases, when can he be auditor again?
wait another 2 years
which companies are required to have an audit committee?
public and SOC
what should the MOI say about shares?
- classes
- voting rights
- descriptions of classes
- authorized number
what are the rules for issuing shares?
can be done at any time but must keep in mind the limits of the authorized share capital
when can a company make a distribution?
- in terms of legal obl/court order OR auth by board res
- company will satisfy S&L test immediately after
- the board, by resolution, has acknowledged tat it has applied the S&L test and will satisfy the requirements
what summaries must the FS include?
- if FS have been audited/reviewed
- name of individual who prepared the FS
whose AFS MUST be audited?
- public company
- any other company required to be regulations if their AFS are in public interest
whose AFS MAY be audited?
- voluntarily if required by SH, board, MOI
- independently reviewed
what does remuneration include?
- fees to directors
- salary, bonus
- pension scheme
- FA to directors
which BOD members can be elected by the MOI?
- directors named in the MOI
- ex officio directors
- alternate directors
what powers do an ex officio have?
all those of a director, except where the MOI says otherwise
what are the requirements for paying remuneration to a director?
- must be authorized by special resolution within the previous two years
- unless MOI says otherwise
can the board appoint a temporary director?
- yes, until the vacancy has been filled
- this temp will have all the regular powers of a director
when may a director be held liable?
- acted without authority, bound company
- party to an act/omission that was calculated to defraud
- authorized/signed misleading FS
- present at meeting but failed…
