2.1 Companies: Intro to Companies Flashcards
What determined the internal management of a company
The AoA
When is a company a subsidiary?
Other C holds majority of voting rights, or can appoint/remove majority of BoD, or controls voting rights
Part of CA on PLC at end of name
s.58
What must PLCs have at the end of their name
Public Limited Company or p.l.c
What type of offence is it not to identify or notify of a PSC
Criminal offence
When can PubC shares not be paid in cash
When there has been an independent valuation
S.763 says what
PubC needs minimum share capital
What is ‘floatation’
Process of obtaining a listing (usually accompanies by an IPO)
How do shareholders get a financial return on their shares - three ways
Dividends, sale and winding up
Who is the main regulator of financial services in the UK
FCA
How can creditors get around a company being limited liability?
Require a personal guarantee from shareholders
What is another name for shareholders
Members
Part of MA on BM quorum
Article 11
What kind of tax is paid on the sale of shares
CGT
What must a public company be listed on to issue shares
LSE
What companies are excluded from the PSC regime
PubCs listed on LSE, as subject to similar regulations
Minimum director for PubC
2
What does a company have to deliver to CH annually
Annual confirmation statements + annual accounts
What MA gives shareholders powers to remove/appoint new Ds
Article 17(1)(a)
Who must notify the company of the status of PSCs, and what time period
The PSC themselves, within 1 month
Does a company have a separate legal personality?
Yes
What type of company need not have an AGM
Private
At what point in time can a poll vote be demanded
In advance of GM, or before/after SoH
What are the time periods to give notice for changes to the PSC register (to change reg + to tell CH)
14 days to change the register, and a further 14 to tell CH
What happens if A tries to enter into C for company pre-incorporation
A is personally liable
Where are the statutory duties of a director in CA
171 - 177
What was an objects clause
Restricted the power of C to deal w/ 3rds
What part of CA demands Ds comply with AoA
S.171
How are BRs usually passed
Simple majority
Where are the conditions for PSC in CA
Part 1 Schedule 1A
Can C enter into contract pre-incorporation? CA provision
No 51(1)
Who must a company register with
CH
What are Ds statutory duties
Act within powers; avoid conflicts; independent judgment; promote success of C for benefit of M; not accept benefits from 3rd; declare interest in transactions
171 - 177 CA covers what
Statutory duties of directors
Why do 3rd make contracts with a company and not its directors?
Company has separate legal personality
What section governs how shares must be paid in Privc
s.582
What two certificates for a PubC require
Trading + certificate of incorporation
What company only requires a certificate of incorporation
Priv
What used to be contained in the memorandum of association
Objects clause + statement of authorised capital
s.755 covers what
PrivC cannot offer to public
Can the nominal value of share capital be discounted?
No
Who deals with the s-to-day management of a company
Directors
Who exercises ultimate control over a company
Shareholders
How must PubC shares be bought
In cash
For what two reasons can the sale of shares in a private company be difficult
AoA may restrict sale to non-Ms, and there is no public market
What is the contract of membership, essentially
The AoA
How many clear days notice to call AGM
21 for PubC
S.270 covers what
Privy need not have CS (but can)
Majority for SR
At least 75%
What kind of company must have CS
Pub
S.171 says what
Ds must company with AoA
What type of company must have an AGM and what section
Pub, s.336
51(1) on what
Company cannot enter into contracts pre-incorporation - instead, A is personally liable
Who do directors owe a duty to
The company
Example of criteria for LSE MM
3 years trading record
Two ways a director can be appointed
OR or by Directors
What is the principle of maintenance of share capital?
Share capital if a permanent fund for creditors, so must be maintained and only returned to shareholders in limited circumstances
Majority for OR
More than 50% (simple)
Article 42 MA applies to what
Poll demand
Minimum number of shareholders to form a company
1 or more
How are the objects clause and statement of authorised share capital now treated
Part of AoA
What can directors be liable for if they exceed their powers or breach their duty
Loss
Ds usually vote by collectively by simple majority - part of MA
Article 7(1) MA
Two ways shareholders exercise ultimate control over a company
Determining the company’s constitution, and voting
Where must an ‘objects clause’ now be under CA ‘06
In AoA
How are NEDs paid
by directors’ fees.
Minimum director for PrivC
1
What kinds of companies have continuing obligations
Listed public companies
Can shares be issued at a discount, or at a premium?
Premium
What is the aim of continuing obligations of listed companies
Full info disclosure, allowing shareholders to object to large/sensitive transactions
S.154 covers what
Minimum directors for pub and priv
What is a statement of authorised share capital
Places a cap on shares that could be issued
What parts of CA impose MA by default
s.9(5)(b) + s.20
s.8(1)(b) applies to what
Privy must have at least 1 share in issue
What are PSCs
Persons with significant control
What method of appointing directors is easier and why
Directors as quick
What is the minimum quorum for BM, and what is it presumed to be if not fixed
2 Ds
What type of company must have at least 1 share in issue
Private
Part of CA on calling GMs
307
What were MA previously called under CA ‘85
Table A
307 CA covers what
Notice for calling GMs
Can an unlimited C be created?
Yes
Two examples of when shareholder consent is required
Loans to director, long-term service Cs of D
What company need not have CS
Priv
Section of CA on PubC needing minimum share capital
s.763
Type of res to change C name
SR (or other means in AoA, or in CA ‘06 provisions)
How many clear days notice to call a GM
14 for Priv and Pub
s.1159 applies for what
Definition of subsidiary
s.582
shares in PrivC must be paid ‘in money or money’s worth’
MA on appointing directors (two ways)
Article 17(1)
What part of CA covers OR
282
What MA allows a poll to be demanded
Article 42 MA
Who has a casting vote in the BM
Chairman
What are shareholders liable for in a company
Only liable for their share subscription
s.271 covers what
PubC must have CS
Two kinds of lists at LSE
Main Market or AIM
Who can be appointed as a director
Anyone who is willing
Two ways to remove a statement of authorised share capital (For company incorporated under CA ‘85)
Altering AoA by SR (s.21(1)), or by OR under the transitional provisions
What sections govern payment for shares in PubC
586 & 593
Why is a breach of the AoA by a director not a BoC?
Directors are not privy to the contract
Part of CA on certificate of incorporation
S.15
7(1) and 8(1)
Two sections say one or more persons to form a company as minimum shareholders
What part of MA lets any D call BM
Article 9(1)
What must Private Limited Companies have at the end of their name
LTD or limited
How must shares be paid in a private company
‘Money or money’s worth’
Part of CA on Ltd at end of name
s.59
What two sections say one or more persons to form a company (minimum shareholders)
7(1) and 8(1)
Section on ‘subsidiary’ definition
s.1159
S.59 and 58 cover what
PLC and LTD at end of the name
What kind of company cannot pass SRs by WR
PubC
What is required to agree on form of notice for calling GM
Board Resolution
What is an IPO
Initial public offering
Who must take reasonable steps to identify PSCs
The company: 790D
What part of MA details who can demand a poll vote
Article 44 MA
What are the essential conditions to become a PSC
Holds more than 25% of either shares or voting rights, or has the power to appoint/remove majority of BoD, or exercises significant control
Part of CA on SRs
283
What liability is there for shareholders in a company
Limited
If D is also S, are they the same role?
No, analysed separately
S.336
PubC to have AGM
s.593 & 586 govern what
Payment for shares in PubC
What is the normal voting method at GMs
Show of hands
What does AIM stand for
Alternative Investment Market
How much of the value of PubC shares must be paid + premium
1/4 of NV + 100% of premium
What must a company be when winding up for a shareholder to get a financial return
Solvent
What is the effect of a PrivC being prohibited from offering to the public
Limits investor base + access to international debt capital markets
What section governs changing the name of CA
77
Why might a company list on AIM instead of MM
Smaller, can’t fulfil MM criteria or for less regulations
How are EDs paid
By salary
What part of MA applies to BRs by unanimity
MA 8
What section of CA governs PSC (notification requirements etc.)
790
For what company’s shares is there no restriction on the method of payment, and no need for immediate payment
PrivC
What must a PSC also be, if it is a C/LLP, beyond meeting the conditions in CA
A registrable entity
What kinds of companies cannot generally offer shares to the public
PrivC
What suggests PubCs can offer to the public
Not mentioned in prohibition against PrivC in s.755
Two kinds of shareholder resolution
Ordinary and special
What kind of tax is paid on dividends
Income
What section requires PubC shares to be in cash
593
When is a company wholly owned?
Only the parent company (+ its wholly owned subs) is a shareholder
Who, under Article 44 MA, can demand a poll vote
Chairman, 2 or more w/ right to vote, or person(s) w/ at least 10% of total voting rights
What is the minimum share capital for a public company
Share capital with nominal value of at least £50k or euro equivalent
