BL - 3 - Companies (1)

Question 1

Are the first directors of a company automatically appointed on incorporation?

Answer 1

Yes

Question 2

What must the name of a company end with?

Answer 2

• “Ltd” for private limited companies
• “PLC” for public limited companies

Question 3

What are the limitations on company names?

Answer 3

A company name cannot be:
- the same as that of an existing registered company
- offensive of a criminal offence
- include words suggesting a connection with the Government or a local authority / particular “sensitive” words

Question 4

Why should the trademarks register be checked before the incorporation?

Answer 4

To avoid a possible trademark infringement.

Question 5

Complete the phrase:
If the company’s name is the same as, or similar to, that of an existing business and the business is likely to be affected by the similarity, the company may be subject to a…

Answer 5

passing off action in tort.

This is an action against someone who is misrepresenting himself as being the same as / connected to another business.

Question 6

How can a company change its name?

Answer 6

Through a special resolution

Question 7

What must the company file with the Companies House to change its trading name?

Answer 7

Nothing.

A trading name can be changed by a board resolution.

Question 8

What are the Articles of Association from a legal perspective?

Answer 8

They are a contract between
(i) a shareholder and the company; and
(ii) a shareholder and the other shareholders

Question 9

What are the articles of association?

Answer 9

They are the company’s internal rulebook dealing with directors, shareholders, meetings and key administrative requirements.

Question 10

How can the articles be changed?

Answer 10

Through a special resolution. Thereafter, the copy of the special resolution and the amended articles must be filed at Companies House.

Question 11

How many directors must a company have?

Answer 11

Private company: 1
Public company: 2

Question 12

Who can be a director?

Answer 12

Human directors must be at least 16 years of age.

Corporate directors are permitted, but at least one director must be a natural person

Question 13

Can a director also be company secretary at the same time?

Answer 13

Yes

Question 14

Is there a limit of the number of directors?

Answer 14

No

Question 15

Who falls under the category “people with significant control”?

Answer 15

Anyone meeting at least one of the following conditions:
- holds more than 25% of the shares
- has more than 25% of the voting rights
- has the right to appoint or remove the majority of the board

Question 16

What registers do the statutory books contain?

Answer 16

• register of secretaries
• register of directors
• register of directors’ residential addresses
• register of members
• persons with significant control (PSC) register

Question 17

What steps are recommended post-incorporation?

Answer 17

• ordering the company seal (optional)
• publicising the company’s name outside the office
• have the correct particulars on business stationery
• registering vor VAT with HMRC (His Majesty’s Revenue Customs)
• …

Question 18

What is the accounting reference date of a company?

Answer 18

Unless provided otherwise, the last day of the month of incorporation

Question 19

What is a board meeting?

Answer 19

It is a meeting of the directors, who pass board resolutions to make decisions

Question 20

What is a general meeting?

Answer 20

It is a meeting of the members (shareholders), who pass ordinary and special resolutions to make decisions

Question 21

A director is prevented from voting and counting towards the quorum on any decision in which he…

Answer 21

has a personal interest

Question 22

What must a director do when there is a conflict of interest?

Answer 22

He must declare the conflict. However, that does not necessarily mean that he cannot vote.

Question 23

Who needs to hold an AGM?

Answer 23

• Companies formed before 1 October 2006, whose articles haven’t been amended
• Companies formed after 1 October 2006 if their articles require an AGM

Question 24

Which shareholders can call a GM?

Answer 24

Members cannot call a GM.

However, directors must call a GM when members holding at least 5% of the company’s paid-up share capital with voting rights demand so.

Question 25

Which shareholders can require directors to call a GM?

Answer 25

At least two members holding at least 5% of the company’s paid-up share capital with voting rights.

Question 26

Who can call a short notice for a GM?

Answer 26

(i) a majority in number of members
(ii) holding at least 90% of the voting shares

Question 27

What is a small company?

Answer 27

It satisfies at least two of:
- turnover not more than GBP 10.2M
- balance sheet of no more than GBP 5.1M
- not more than 50 employees

Question 28

What are the benefits of a small company?

Answer 28

• they are not required to have their accounts audited.
• their directors do not need to prepare a financial report

Question 29

What must the company file with the Companies House every year?

Answer 29

• accounts (do not need to be audited for small companies)
• a confirmation statement