4. Nature and Formation of Companies Flashcards
What is a benefit of an unlimited company?
It is not obliged to publish its accounts so enjoys more confidentiality
What are the two types of limited company?
- Company limited by shares
- Company limited by guarantee
In addition to the general requirements for a private limited company, what two additional things are required to register as a public limited company?
- Nominal share capital of at least £50,000
- Trading certificate
What is the minimum number of directors in a private company and a public company?
Private: One
Public: Two
Within what time period from the end of the accounting period must annual accounts be filed for a private company and a public company, and need they be audited?
Private: Nine months. Need not be audited.
Public: Six months. Must be audited.
Who is a promotor?
A person who takes the necessary steps to form a company
What is a Memorandum of Association?
A statement signed by people wishing to become members, indicating this intent and agreement
What duties are owed between promotors?
Fiduciary duty and duty of good faith
Who is liable on pre-incorporation contracts entered into in the company name, and what is a way to avoid this?
The promotor. Can be avoided by novating the contract after incorporation.
What eleven things must be included in the application for a company to the Registrar?
- Name
- Address
- Business activity code
- Whether public or private
- Whether limited by shares or guarantee
- Details of subscribers
- Statement of capital and initial shareholdings
- Proposed officers/directors, and their residential address
- Details of people with significant control
- Statement of compliance with Companies Act 2006
- Payment of the relevant fee
What are the five limitations on a company name?
- Cannot be the same or essentially the same as an existing company
- Must end in Limited or Ltd or Public Limited Company or Plc
- Cannot be offensive
- Approval required if name suggests connection to government
- Approval required if name suggests a protected profession
What type of company does not have to use the word Limited?
A company limited by guarantee
What type of resolution is required for a company to change its name?
A special resolution of the members or as otherwise provided in the articles.
What documents make up a company’s constitution?
- Articles of Association
- Any resolutions/agreements adopted to amend the articles
What articles apply automatically unless the company opts for its own?
The Model Articles
What document is not required to be filed with the Registrar?
The Articles of Association
What is the extent of a shareholder’s right to enforce provisions of the articles, and when is a shareholder not able to enforce?
Only insofar as it relates to membership rights, and a shareholder cannot enforce the articles in any other capacity, e.g. a personal right, or if they are also a director
What must be true of an amendment to the articles before a shareholder who did not vote for it can apply for the court to set it aside?
No reasonable person would consider it to be for the benefit of the company.
What is the question the court will ask in determining whether an amendment which affects the minority should be set aside?
Is the benefit derived at the expense of the minority, or is it something that any and all members could enjoy?
What are the only times that the corporate veil has deemed to have been lifted?
Directors or shareholders in breach of other legal provisions, e.g. company was formed to carry out a fraud or avoid existing obligation.
