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BLP > 4. Director's Duties > Flashcards

4. Director's Duties Flashcards

1
Q

Example of notes required in annual accounts, w/ regard to D

A

Salary, bonus and compensation

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2
Q

When is there no approval needed for loans

A

If wholly-owned sub

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3
Q

What shareholder res must all companies get for loan/security/guarantee to Ds

A

OR

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4
Q

Provision - Ds owe duties to company

A

170(1)

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5
Q

How do Ms approve BoD in advance - provision

A

By OR or in AoA, 180(4)

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6
Q

What is a ‘minor transaction’ as exception to needing approval for loan to D/CP (LOAN/QUASI-LOAN)

A

Up to £10k

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7
Q

If authorising CoI, so no breach of 175, what does 175 state about Ds participation

A

Does not count for quorum or voting

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8
Q

When is a derivative claim likely

A

If only minority are in favour of bringing an action, as majority could remove Ds

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9
Q

1163

A

Defines NCA for 190

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10
Q

What happens if no approval from Ms obtained for LTSC

A

Provision void to extent of contravention, and C deemed to contain term entitling termination at any time w/ reasonable notice

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11
Q

275

A

Duty to keep reg of CS

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12
Q

When is approval not needed from Ms for LTSC or SPTs

A

Not needed from Ms of wholly owned sub, but is needed from Ms of HC

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13
Q

Which statutory duty is not enforceable as FD, limiting to damages

A

174

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14
Q

Tax implications for recipient of loan from close company

A

Only deemed to receive dividend equal to loan if loan written off

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15
Q

D w/ interest in 190 + voting at GM

A

D + CPs can vote, as MA 14 only applies to Ds

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16
Q

Where is NCA defined for 190

A

1163

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17
Q

Which statutory duty has a non-exhaustive list of factors to have regard to

A

Promote C success, 172

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18
Q

What can Ms not ratify

A

Anything illegal

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19
Q

What is the sanction for failing to get M approval for loan

A

Voidable (unless R impossible)

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20
Q

196

A

Affirming SPT by OR

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21
Q

What if approval of LTSC is by WR

A

Send copy of C to every M w/ WR

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22
Q

two-stage test for if approval needed under 188

A

C continues w/o company decision + C unable to terminate, or only in specific circumstances

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23
Q

What must transaction be if between £5k + £100k

A

Must be 10% of C’s NAV

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24
Q

When are there tax implications on loans by close company

A

If given to participator, and not in ordinary course of business nor less than £15k to full-time employee w/ no material interest

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25
Q

What is failure to declare under 182

A

Criminal offence, not just BoD

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26
Q

What kinds of companies need approval for loans to CPs/QL/CT

A

PrivC associated w/ plc, or plc

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27
Q

What is the general rule on company indemnifying Ds

A

Void

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28
Q

What does loan mnemonic stand for (CTAESD)

A

Company, transaction, approval, exceptions and sanction and director’s duties

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29
Q

What happens to liability for relevant parties if loan affirmed within reasonable period

A

Continues

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30
Q

What is D’s general authority under MA 3 subject to

A

MA 4 M reserve power

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31
Q

When is PrivC associated w/ pub

A

If pub is sub of Priv, or Priv is sub of plc

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32
Q

Why is there little use in short notice for approval of LTSC

A

Copy of C must be available for inspection 15 days prior to GM

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33
Q

What can Ms do if loan given w/o M approval

A

Affirm within reasonable period

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34
Q

If loan to D or CP of D, what is effect on BM

A

MA 14(1) - excluded from voting and quorum

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35
Q

162

A

Duty to keep reg of Ds

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36
Q

MA 52(2) is relevant to what

A

Prohibiting company from indemnifying Ds against liability to C.

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37
Q

Section on declaring interest in transaction

A

177

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38
Q

Part of CA on PrivC associated with pub if sub of plc

A

256(a)

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39
Q

What are the tax implications for the close company on loan to participator

A

Pay CT within 9 months + 1 day from end of period

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40
Q

1147

A

Deems delivery of notice 48 hours later

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41
Q

Procedure if LTSC proceeding to GM approval

A

C must be available for inspection 15 days prior to GM

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42
Q

When does MA 14(1) not exclude D w/ interest under 177 from participating in voting + quorum for BM

A

Tailord AoA, disapplied OR, replaced by SR, interest unlikely to give rise to CoI, or from permitted cause in MA 14(4)

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43
Q

D w/ interest in 190 + voting at BM

A

MA 14(1) applies, so D excluded from quorum + voting

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44
Q

When must D declare interest in existing transaction

A

Immediately

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45
Q

What can Ms do if Ds refuse to bring Ps for D’s BoD

A

Bring derivative claim

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46
Q

423

A

Copy of Annual Accounts to be sent to every M

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47
Q

When is CP not liable for gain/loss in unauthorised SPT

A

Unaware of contravention

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48
Q

What address must both D and CS file

A

Service

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49
Q

What is a credit transaction

A

Company provides goods/services w/ promise of future payment - no 3rd party

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50
Q

If D declares interest under 177, prior to BM, what happens at next BM

A

Deemed to form part of next BM

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51
Q

What could happen to D if duty breached

A

Terminate D’s position or disqualify D

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52
Q

What must D state when declaring interest under 177

A

Nature + extent of interest

53
Q

Two BRs required whenever Board are approving contract

A

BR1 to approve form, and BR2 to authorise signatory

54
Q

Provisions for statutory duties of Ds

A

170 - 177

55
Q

When is a property transaction automatically substantial

A

Over £100k

56
Q

Where is ‘connected person’ defined in CA for 239

A

252

57
Q

Which duties should be considered when making decisions at BMs

A

ALL

58
Q

What is the best practice for if D has interest in transaction

A

To declare

59
Q

When will close company get a refund of CT paid on loan to participator

A

If waived/repaid

60
Q

Provision requiring LTSC to be kept open for inspection once approved

A

228

61
Q

What is the liability of relevant parties for failing to get M approval for loan

A

Account for gain + indemnify for loss

62
Q

How do you work out C’s NAV for 190

A

Look at accounts or called up share capital

63
Q

Model Article relevant on indemnifying Ds

A

52(2) prohibits indemnifying D against liability TO C

64
Q

When is D not liable for gain and loss caused by unauthorised SPT

A

If took reasonable steps to ensure compliance, or unaware of contravention

65
Q

D w/ interest under 177 + voting at GM

A

D can participate, as MA 14 only applies to Ds

66
Q

What is a ‘minor transaction’ as exception to needing approval for loan to D/CP (CREDIT TRANSACTION)

A

Up to £15k or in ordinary course of business and normal terms

67
Q

228

A

LTSC to be kept open for inspection once approved

68
Q

413 requires what

A

Disclosure of credit advanced to Ds in accounts

69
Q

mnemonic for loans to Ds

A

Can’t Take An Elephant Sky Diving

70
Q

Two-stage test in reasonable skill duty (174)

A

Objective (reasonably expected of D) + subjective (skill D actually has)

71
Q

1159 defines what

A

Wholly-owned sub

72
Q

What is a quasi-loan

A

Company agrees to pay 3rd D/CP’s debt, and D/CP to reimburse

73
Q

When does 175 not apply (other than transactions w/ C)

A

If unlikely to lead to CoI, or authorised

74
Q

How long to notify CH of any changes to D + CS reg

A

14 days

75
Q

If D/CP cannot vote in ratifying, what need they not be sent and in what case

A

If ratifying by WR, need not be sent WR

76
Q

Two examples of ‘connected person’ under 252

A

Direct family + body corporate in which D + CPs own more than 20% share capital/voting rights

77
Q

Part of CA on indemnifying Ds

A

232 - 240

78
Q

239

A

Ms can ratify D’s BoD by OR

79
Q

What is a close company

A

Company under control of 5 or less participators, or all participators are Ds

80
Q

How are D duties relevant for loans to Ds/CPs

A

Consider 177 declaration + 172

81
Q

What are PMMs when LTSC approved

A

Copies of C must be kept (228) open to inspection w/o charge for Ms

82
Q

Why do statutory duties exist

A

To ensure M confidence and curtail wide power given under MA 3

83
Q

MA provision on D’s general authority

A

MA 3

84
Q

What must you have in mind if restructuring loan to avoid needing M approval

A

If still complying w/ D duties

85
Q

How are statutory duties of Ds enforceable + provision

A

As FDs, 178

86
Q

What happens if loan to D to defend Ps, and D unsuccessful

A

D must repay

87
Q

What additional address must D file

A

Residential (kept private at CH)

88
Q

When is approval required for D’s service conract

A

If C longer than 2 years, looking at aggregate period

89
Q

How do you show duties considered when making decisions at BM

A

Note in Board Minutes

90
Q

When does 177 not apply

A

D unaware, unlikely to give rise to CoI, other D reasonably aware, or concerns terms of D’s C

91
Q

What info on Ds do CH require

A

Identity in reg of Ds, w/ service address, and various notes in annual accounts

92
Q

Kind of res required for 190

A

OR

93
Q

Section on LTSC

A

188

94
Q

Provision for affirming SPT by OR

A

196

95
Q

What if no approval given for SPT

A

Can affirm by OR within reasonable period, or transaction voidable

96
Q

Where is CP defined for 190

A

252

97
Q

How many statutory duties

A

7

98
Q

Provision on interest in existing transaction

A

182

99
Q

Where must QTPIP/QPSIP if given be disclosed

A

In D report + kept at reg office

100
Q

When do additional restrictions apply for loan/security/guarantee?

A

If PubC/PrivC associated w/ pub

101
Q

Duty to keep reg of CS provision

A

275

102
Q

When are Ds liable for gain or loss caused by unauthorised SPT

A

Regardless of affirming

103
Q

When is notice of interest under 177 deemed delivered + provision

A

48 hours later (1147)

104
Q

When does 175 not appl

A

For transactions w/ C

105
Q

Four normal remedies for breach of statutory duty

A

set aside, injunction, restore property and/or damages

106
Q

Duty to keep reg of Ds provision

A

162

107
Q

When is D/CP not liable for not getting M approval for loan

A

If D took reasonable steps, or D/CP unaware of contravention

108
Q

Where is derivative claim in CA

A

260

109
Q

Section on SPT

A

190

110
Q

If D commits BoD, what can Ms do AFTER the fact + provision

A

Ratify by OR (239)

111
Q

Who do Ds owe duties to

A

Company

112
Q

What four options are open to Cs to indemnify Ds

A

Insurance, QTPIP, QPSIP, and funding Ds Ps

113
Q

When must D declare interest under 177

A

Before transaction

114
Q

180(4)

A

Ms can approve BoD in advance by OR/AoA

115
Q

When is there no need to declare interest in transaction under 177

A

If D unaware, unlikely to lead to CoI, other Ds reasonably aware, or concerns service C

116
Q

Why is bringing a derivative claim difficult

A

Need court permission

117
Q

Where is substantial defined for 190

A

191

118
Q

3-stage test for 190

A

CP, NCA and substantial

119
Q

Inspection of D and CS reg for Ms is..

A

Free

120
Q

When is property transaction NOT substantial

A

Below £5k

121
Q

What may need to be disclosed in accounts after loan to D

A

The credit advanced

122
Q

Provision requiring copy of Annual Accounts to be sent to every M

A

423

123
Q

Where is wholly-owned sub defined in CA

A

1159

124
Q

D w/ interest under 177 + voting at BM

A

MA 14(1) excludes D from voting + quorum

125
Q

How can D give notice to other Ds of interest under 177

A

Written under 184, general, or at BM

126
Q

Who cannot vote if ratifying under 239

A

Ds and any connected person

127
Q

Examples of when no approval required for loans to D/CP

A

For D to defend Ps, or given by money-lending company on normal terms, or for minor transaction

128
Q

When is 175 likely to be triggered

A

For when D ting for competitor

129
Q

Can D vote/count for quorum if ratifying under 239?

A

No vote, but can count for quorum

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