7. Company Administration Flashcards
What are the formation regulations for: A) Sole Traders B) Partnerships C) Limited Liability Partnerships D) Companies
A) None
B) Formal or informal agreement
C) Register with Registrar of Companies
D) Register with Registrar of Companies
What is the legal status of: A) Sole Traders B) Partnerships C) Limited Liability Partnerships D) Companies
A) No separate legal personality
B) No separate legal personality (partners own all property and are liable)
C) Artificial legal person with full capacity, perpetual succession, capacity to contract, own property, sue and be sued
D) Artificial legal person with full capacity, perpetual succession, capacity to contract, own property, sue and be sued
What are the transferral of ownership protocol for: A) Sole Traders B) Partnerships C) Limited Liability Partnerships D) Companies
A) None
B) Can transfer share of firm but cannot transfer right to participate in management
C) Can transfer share of firm but cannot transfer right to participate in management
D) Freely transferable
What is the minimum number of members for: A) Sole Traders B) Partnerships C) Limited Liability Partnerships D) Companies
A) Must be one
B) 2
C) 2
D) 1
Who is the management for: A) Sole Traders B) Partnerships C) Limited Liability Partnerships D) Companies
A) The sole trader
B) All partners
C) All partners
D) A member has no right to participate in management unless also a director
Who are the agents for: A) Sole Traders B) Partnerships C) Limited Liability Partnerships D) Companies
A) The sole trader
B) All partners
C) All partners
D) Members are not agents, unless also directors
What are the liability conditions for: A) Sole Traders B) Partnerships C) Limited Liability Partnerships D) Companies
A) Unlimited liability to sole trader
B) Unlimited liability to partners
C) Limited liability to capital member agrees to contribute
D) Liability limited to share capital member agrees to contribute
Powers of the organisation: A) Sole Traders B) Partnerships C) Limited Liability Partnerships D) Companies
A) Carry on any business
B) Carry on any business
C) Carry on any business
D) May be restricted to powers set out in objects clause of Memorandum
When does termination take place for: A) Sole Traders B) Partnerships C) Limited Liability Partnerships D) Companies
A) When the sole trader chooses
B) Whenever any partner gives notice
C) Perpetual succession and formal winding up
D) Perpetual succession and formal winding up
What is the naming protocol for:
A) Private Companies
B) Public Companies
A) Ends in Limited or Ltd
B) Ends in Plc or Public Limited Company
What are the capital requirements for:
A) Private Companies
B) Public Companies
A) No minimum capital, but cannot offer shares to the public
B) Minimum £50,000 (25% paid up) and can offer shares to the public
What are the listing requirements for:
A) Private Companies
B) Public Companies
A) Cannot list on the stock exchange
B) Can obtain listing on the stock exchange
What is the minimum number of members for:
A) Private Companies
B) Public Companies
A) 1
B) 1
What is the minimum number of directors for:
A) Private Companies
B) Public Companies
A) 1
B) 2
What is the protocol for commencement of business for:
A) Private Companies
B) Public Companies
A) Can trade as soon as incorporated
B) Needs a s.761 trading certificate which requires minimum capital of £50,000 (25% paid up) and the details of preliminary expenses and amounts paid to promoters
What are the consequences of having no s.761 certificate for:
A) Private Companies
B) Public Companies
A) None
B) Directors can be fined and held personally liable, and the company can be wound up after 12 months
How soon after year end should accounts be publicly filed for:
A) Private Companies
B) Public Companies
A) Within 9 months
B) Within 6 months
What is the veil of incorporation?
The shielding of members from the responsibilities of the company due to its separate legal personality
What are the 5 direct implications of separate legal personality?
- Members liability limited to amount unpaid for shares (company unlimited liability)
- Perpetual succession
- Ability to own property
- Transferability of shares
- Raising finance easier as they can grant floating charges and issue shares
What are 2 statutory examples of when the veil of incorporation can be lifted?
Fraudulent trading or wrongful trading
What is a promoter?
Anyone who does anything to form or float a company, including issuing a prospectus, negotiating preliminary agreements and obtaining directors (not someone acting in their professional capacity)
What are the duties of a promoter?
- To exercise reasonable skill and care
2. To avoid conflict of interest, and disclose if one occurs
What will failure of a promoter to disclose a conflict of interest result in?
Contract with company rescinded and promoter sued
What 11 pieces of information/documents that have to be sent to the Registrar of Companies?
- Proposed name
- Fee
- Location of registered office
- Intended address
- If liability of members is limited
- If the company is private or public
- Statement of capital and initial shareholding
- Articles of Association
- Memorandum of Association
- Proposed directors and secretary
- Statement of compliance
What are the valid locations for the registered office of a company?
England and Wales, Wales, Scotland or Northern Ireland
When a company is bought off the shelf, what MUST be done and what MAY be done?
The register of members MUST be changed, the articles names and anything else MAY be changed
The Certificate of Incorporation states… (5)
- The name and registered number of company
- Date of incorporation
- Whether limited or unlimited (by shares or guarantee)
- Whether private or public
- Location of registered office
For how long should the following retain their accounting records:
A) Private Companies
B) Public Companies
A) 3 years
B) 6 years
What is the memorandum of association?
The document that states that the subscribers wish to form a company and become members of it - a statement of historical record
What are the articles of association?
The setting out of the internal regulations of the company - the means by which it is managed and run
Which act rendered the objects clause of the articles of association unrestricted?
The 2006 Companies Act
What is the status of the articles as a contract?
The Articles and Constitution bind the company and it’s members in contract as if each has signed these documents as a deed
Can the articles of association by altered?
They can be changed by special resolution (75% majority)
What majority is require for an entrenched provision in the articles to be altered?
From 75% to 100%
