BLP Flashcards
1
Q
what’s an outgoing partner entitled to (dissolution)
A
default provision - interest at 5% per annum on the value of their share until it is paid
2
Q
order of payment upon partnership dissolution
A
creditors
partners who have lent money
partners receive the share of capital they are entitled to
surplus is shared per the terms of the agreement
3
Q
time notice required for BM?
A
must be reasonable + given to all directors (and include date, place and time)
4
Q
holding a BM checklist
A
1) effective notice
2) is it quorate? (considering eligble/not directors)
3) deal with MA14 + s177
4) vote on show of hands
5) chair can have casting vote
6) must be over 50%
5
Q
can MA 14 be disapplied?
A
yes
6
Q
what happens if meeting did not comply with MA14?
A
meeting invalid - decision void essentially
7
Q
can s177 be disapplied?
A
never! always need to declare interest in proposed transaction, even if MA 14 is disapplied and is allowed to vote/count
8
Q
what are the exceptions for s177?
A
- cannot reasonably give rise to conflict of interest
- all other directors are aware
- meeting is about service contract
9
Q
how can a director be appointed?
A
by unanimous decision of other directors (at BM - don’t need GM for it)
10
Q
process of doing something that requires OR/SR
A
1) call BM to call GM
2) hold GM and vote*
3) call BM to implement vote of GM
*the GM can be held as written resolution (if private company)
- make sure to specify lapse date, how to signify agreement, what the resolution is proposing and attach copy of contract
11
Q
when can SH not vote if conflict of interest?
A
only case if its to
- vote for share buy back of their own share
- vote to ratify breach of them as director
12
Q
can you disapply the provision that a shareholder is not allowed to vote on their own share buy back?
A
yes! but this is only effective in GM - if the resolution is to be passed as a written resolution, still can’t vote
13
Q
how is voting done in GM?
A
show of hands (1 Sh 1 vote)
poll vote (vote per shares = more shares more power)
14
Q
how is voting done in WR? (private comp)
A
vote per shares = more shares more votes
15
Q
notice needed for shareholders’ meeting (GM)
A
14 clear days - sent to every shareholder, director and auditor (hard copy, electronic or website)
must include place, time, date, general business to be dealt with and exact working of any special resolution + any right to appoint proxy
16
Q
can SH requisition a GM on short notice?
A
yes - need to have 90% of voting shares in a private company and 95% in a public company
it can then be held straight away
(this obviously cannot work to dismiss a director because would need 28d space)
17
Q
can SH requisition a GM?
A
yes - have at least 5% of paid up voting shares
directors need to answer within 21 days (this means send the WR + any statement of up to 1,000 words) and hold the meeting within 28d of their response
18
Q
can a SH vote if they are interested in the decision?
A
yes, unless its about a breach of them as a director (attempt to ratify) or if its their own share buy-back
19
Q
who can demand a poll vote
A
anyone with 10% total voting shares for that resolution
2+ people with right to vote
the chair
the directors
20
Q
how does the vote counting in a WR differ from in a GM?
A
both are (GM can be) 1 vote per share
BUT
in a written res this is against the TOTAL amount of shares. in a GM its only against the amount of shares present
i.e if you know someone is not going to vote and won’t be present, better to do a GM (if quorate) because otherwise in the WR the vote ‘yes’ is against a bigger number
21
Q
can SH % for requisiton of GM be changed?
A
normally its 5% of voting rights
articles can reduce % but cannot increase it
22
Q
how can a director be appointed?
A
either by Board Resolution or by the Shareholders (means wouldn’t necessarily need a OR)
–> need to file AP01 within 14 days of appointment and change register of directors
23
Q
administrative requirements post appointing new director
A
file AP01 within 14 of appointment
change register of directors + register of director’s address
24
Q
does a service contract require GM?
A
usually the board (BM) will determine the terms
it will require an OR if it attempts to give a guaranteed term of employment for 2+ years
25
is a service contract invalid if no OR is passed to approve 2+ fixed years?
no it remains valid/enforceable, but the fixed term is not = implied term allowing termination on reasonable notice
26
how to terminate service contract?
directors decision
27
quirk of a company with only 2 directors wanting to approve a service contract?
might need to disapply MA 14 (suspend/remove) otherwise meeting will never be quorate
28
how is a director removed?
NEED OR (= BM - GM - BM)
- must give 28d clear notice (unless not practicable then only 14 clear days and an advert) = short notice or WR are not possible
- director is allowed to make representations at the meeting
- if they are a SH may have bushell v faith clause!
29
is a OR needed if a director chooses to resign?
no
30
what causes automatic termination of director?
- bankruptcy
- court disqualifies them
- doctor says they are (writing) physically/mentally unfit for 3+ months
31
what's the admin when a director is removed?
- change register of directors + register of directors' address within 14 days
- tell Companies House within 14 d
32
what's the time limit to send resolutions to CH?
15 days
33
when does the PSC register need to be updated?
if it passes the "PSC threshold"
- over 25%
- over 50%
- over 75%
34
forms required to change PSC
PSC01 for first timer
PSC04 if change threshold
PSC07 if stop being
35
trigger words for when register may need to be changed
- PSC
- removing (TM01) /appointing (AP01) director
- filing of any special resolution
- filing OR related to share buy back (exception)
- change of articles
36
requirements for a SPT
director in their personal capacity (or someone connected to the director) buys or sells a NON-CASH asset of substantial value to/from company
37
what's a person connected to director for SPT?
- spouse/CP/stepchild/ longterm partner/their child/ parent
- company in which the director or anyone connected to them hold more than 20% voting power
38
what's a non cash asset for SPT?
any property or interest in property other than cash (including charges)
39
whats substantial value for SPT?
- over £100k
- over 5k and worth more than 10% of company's net ASSET value (!!! 10% is super important)
--> if a director is eg buying a car or selling their car to the company, doesnt matter if its not over 10% (+5K) or £100k
40
what's necessary to allowed a SPT?
OR from SH
(bm - gm - bm)
41
filing requirements post SPT
none (just make sure you got the SH OR)
41
what happens if director engages in SPT without shareholder approval?
transaction is VOIDABLE at option of the company
- director/person connected/ those who authorised may be required to account to company for gain and indemnify company for loss
42
against who can remedy for invalid be SPT be brought?
- director of compny
- director of company that co-entered transaction w
- connected person
- any other director who authorised such transaction
43
actions SH can take if they think they were injustcied?
- breach of contract (breach of articles - against fellow SHs or directors)
- breach of contract (breach of shareholder agreement - this is only against fellow SHs)
-unfair prejudice claim (members of group has been injusticed by a current or proposed act - objective test) (expensive, time consuming)
- derivative claim (also very rare, its a 2 step process and court has total discretion, will depend on the breach and evidence available)
44
s171 (directors duties)
duty to act within powers and use for proper purpose (promote success of C)
45
s172 (directors duties)
duty to promote success of the company (subjective look at long term consequences, interests, reputation, environemnt)
46
s173 (directors duties)
exercise independent judgement
47
s174 (directors duties)
reasonable care, skill and dilligence
2 part test - look at general skill of director in that position and what would be expected of a general dierctor
breach is akin to negligence (tortious damages)
48
s175 (directors duties)
avoid conflict of interests in a transaction the company is not involved in
!! strict liability - doesnt matter if the company would not have profited from it or knew and decided to go against
49
company buys and sells houses, a house comes on the market, the company decides not to buy it and the director buys and sells it - what breach is this?
s175 - avoid conflict of interest in a transaction with company
to circumvent: authorise it in advance (MA 14 rules apply)
50
s176 (directors duty)
not accept benefit from a 3rd party conferred because of their position as director
51
s177 (directors duty)
declare nature and extent of interest in a proposed transaction (make it before company enters)
52
when is s177 not considered breached?
- directo not aware of conflict in question
- cannot be reasonably regarded as giving rise to conflict
- directors are already aware
- its in the service contract terms
53
s182 (directors duty)
declare interest in an existing transaction - this is a criminal offence (fine)
(either because failed to declare under s177 or because happened before they joined and then they joined)
54
when is s182 not breached?
- The director was not aware of the conflict, or the contract
- The interest cannot reasonably be regarded as likely to cause conflict
- The directors are already/ought to be aware
- It is about the terms of the director’s service contract
- The interest was already declared under s177
55
how can directors duties breaches be 'solved'?
by SH ratification (never by directors themselves)
in advance or after the breach
director in question, or any persons connected, are not allowed to vote
56
is shareholder approval required for loans?
no, this falls under directors' general powers to run company UNLESS its actually a loan to a director!! in which case an OR is required
+ need to make sure terms of the loan are available 15 days before meeting or sent alongside WR = not possible to have short notice GM
57
procedure for doing a loan to director
- BM - GM - BM
must pass OR
must have terms of loan exposed for 15 days before meeting (or sent w WR) = not possible to have short notice meeting, better to do it via WR if want to go quickly
58
exceptions to loans to directors needing OR
- loan under £50k enabling director to do their duty (eg get a car for the company)
- if its a loan for personal reasons: limit is 10k
-minor and business transactions up to 10k
- if its a loan to defend themselves or company in proceedings or investigations
59
what's the procedure to make a loan to a family member of director?
don't actually need OR (so technically nothing) but need to make sure not breach director duties (interest in proposed/arranged transaction, SPT,...)
60
procedure for payment for loss of office
if entitled to over £200, need OR to approve it
- terms must be exposed 15d before GM so again can't have a short notice meeting
61
will i be disqualified as a director and for how long?
- convicted for indictable offence
- fraud on winding up
- persistent breaches of company legislation
- summary conviction for failure to file a required notice or document
- breach of competition law
- fraudulent or wrongful trading
- being an unfit director of an insolvent company
--> any period between 2 and 15 years
will need leave of court to be a director again or deal with management of company
+ personally liable for debts they are involved in during their disqualification
62
steps for share allotment? CA 2006 companies (post 2009)
1) constitution restrict?
MA doesnt but may have special article in which case would need SR
2) do directors have authority to allot?
they will if its the same type as already existent and last allotment was less than 5 years ago, can do just with BM without SH (s550)
If its a public company, or its a private company and diff type of share or same type but last time more then 5 years ago = need SH through OR (need to call GM) (need to file this OR) (s551)
3) do pre-emption rights apply?
if equity shares (participating) for cash consideration = need to ask directors or disapply pre-emption via SR (and directors make written statement)
--> offer to exsiting SH needs to be for at least 14 and communicate when acceptance must be given, cannot remove until deadline
If equity shares or non equity shares and for wholly or partly non cash consideration, they dont apply
4) if its a new class of shares, will need an extra SR to incorporate in articles (change articles)
63
how to allot new shares in company pre CA 2006
1) there will be ceiling on allotment = need OR
2) will need OR to give directors rights
3) pre-emption rights work in the same way (= if equity and for cash = need SR to disapply)
64
admin checklist after alloting new shares?
within 15 days must
1) file any SR and OR in CH
2) file the changed articles (eg to change ceiling or disapply pre-emption rights or introduce new class of share)
3) send form SH01 to CH within 1 month of allotment (indicating return of allotment and share capital) and PSC form if changed
4) register any changes in members and PSC within 2 months
5) prepare and allocate share certificates within 2months of allotment
65
how to exactly transfer shares
1: transferor completes and signs stock transfer form, to give to transferee
2: transferee sends share certificate and stock transfer form to company
3(a): company sends new shareholder a share certificate (at latest within 2 months)
3(b): company enters shareholder’s name on register of members (2 months at most)
3(c): company notifies registrar of companies of change of ownership
66
a SH is transferring their shares but we don't like the transferee - what can we do?
you cannot stop a SH from transferring shares but you can refuse to register the transfer = transferee will only own the shares in equity so transferor will hold legal title and thus continue to be paid and attend meetings
the transferor, however has to transfer dividends payment to transferee and has to vote according to their wises
67
what is share capital
Share capital is the money given to buy shares, and it generally cannot be used since it is the money creditors use for repayment of debts
=
Means dividends generally cannot be paid out of share capital, and the company should not generally buy its own shares
68
how can a company buy back its own shares?
1) check they have sufficient distributable profit or use proceeds from fresh issue of shares
2) check shares are fully paid
3) call BM to call GM for SH to pass OR (SH in question is not eligible for written res and whilst can vote, wont count if its the difference vote)
- copy of contract must be available 15d before (no short notice)
4) e company must file a return of purchase of the shares + send a notice of cancellation within 28 days of completion
5) amend PSC and members register as required
6) keep copy of contract for 10y
69
what are distributable profits?
accumulated profit - accumulated losses
(means it doesnt matter if the company did not make a profit that exact year)
70
how to buyback shares out of capital?
ONLY PRIVATE NOT PUBLIC
1) make sure distributable profits its exhausted
2) make STATEMENT OF SOLVENCY 1 week before meeting (directors may have to contribute if it goes insolvent within 1y)
3) annex AUDITOR's REPORT to statement of solvency
4) need OR to authorise buyback (normal) + SR to authorise from capital
5) make copy of statement + report available to all members (with WR or at meeting)
6) within 7 days of passing SR+OR make a notice in London Gazette (amount, approval, creditors have 5w to prevent buyback)
7) publish same thing in national newspaper/give notice to creditors
8) file the statement and the report at CH at the same time as notice
9) the statement and report must be available for inspection for the next 5w
10) if no creditor objects, can finally hold the BM to implement the OR and SR and enter contract to buy back shares (decide who's entering contract on behalf of C)
71
how to pay dividends?
must be from distributable profits - there's no rights to dividends per se, need to be recommended by board resolution and then approved by OR (or recommend lower but cannot recommend more)
--> once this has been followed, dividend becomes a debt that must be paid
(if they're interim dont need SH approval)
72
Pro/Con of overdraft
recommended to a small-medium business
means company can overdraft in their current account in return for fee + interest
the max overdraft is agreed beforehand
its good because its flexible and information = useful for day-to-day expenses
but issue is that its uncommitted, meaning lender can ask for repayment at any time (without notice) and interest is charged on compound basis (unpaid interest added to total)
73
Pro/Con of revolving credit facility
good for a business where income is unevenly distributed throughout the year
essentially a maximum is made available to borrow throughout a period, which can be borrowed and re-borrowed
advantage is that interest is reduced when borrowing in reduced, but disadv is that interest will be high if borrowing is high + fee charge for use + takes time in negotiating + higher payments towards end of loan period
74
Pro/con of fixed term loan
it fixes the amount borrowed for a period and fixes interest repayment
good for buying capital assets and quite certain (all terms fixed = good for lender and borrower) + can be syndicated against multiple lenders to spread risk
issue is time and expense involved in negotiating + once money is repayed cannot be reborrowed
75
important things in loan agreement
- amount
- interest
- period to be repaid
- rate of payment
- committed (need notice to demand payment) or uncommitted
- agree express covenants
- agree any securities
--> check whether there are no negative pledge clauses + define events of default
76
details of fixed security
- title not transferred (no immediate right to possession), but is if the borrower defaults
- can only sell asset with borrower's permission
-can have multiple shareholders over same asset
77
details of floating charges
- only over incorporated companies !!
- group of assets constantly changing
- borrower has freedom to deal with it until the charge crystallises (i.e because they default) = becomes fixed charge
78
how to grant charge (fixed/floating)?
board resolution is enough (make sure agreement is sign by company by person with authority)
Make sure charge is registered within 21d at CH (MR01 + fee + copy of instrument = get certificate of registration)
79
negative pledge clause
prevents company from creating later charges with priority over floating charge without the consent/permission of the floating charge holder
(if granted, not void but if the 2nd chargeholder has actual knowledge, will be bound by pledge)
--> this is disclosed on MR01 firm (so will see by simple search in CH)
80
how to protect 2nd chargeholder form tort of inducing breach of contract?
agreement for charge should contain covenant by company that there are no earlier charges which are subject to a negative pledge clause
81
quirky thing to request company when entering charge agreement.
covenant that there are no earlier charges which are subject to a negative pledge clause
82
when is a corporate insolvency declared?
1) if total liabilities exceed total assets (balance sheet test)
2) if current liabilities exceed current assets = can't pay debts as they fall through (cash flow test)
3) if a creditor obtains judgement against company and attempts to enforce it but has not been paid in full/at all
4) if creditor serves statutory demand for over £750 and left unpaid for over 21d
5)if judge rules (on application from creditor) that winding up is just and equitable
83
types of liquidation
1) CVL (creditor's voluntary liquidation)
2) MVL (member's voluntary liquidation)
3) compulsory liquidation
84
main points MVL
basically when company wants to stop trading
1) company initiates process and makes declaration of SOLVENCY
- but if a liquidator realises the company is insolvent, MVL turns into CVL)
--> directors need to make a statutory declaration of solvency and statement of assets and liabilities 5w before --> need to file this and the SR within 15d
2) need a SR to do this
3) then (once its passed) get a OR to appoint a liquidator
4) within 14d, liquidator will put forward a plan to creditors who must approve it or put their own plan forward
--> liquidator totally takes over = directors lose power but remain in office
85
main points CVL
basically stems from creditors but its also the company that initiates process BUT this turn does not need to make a declaration of solvency
1) need a SR to enter
2) need an OR to appoint liquidator
3) directors lose power but remain in office
4) within 14d liquidator proposes plan and creditors agree or propose their own
5) liquidation stats
6) essentially dissolved in 3m
--> if creditors choose a diff liquidator than SH, they have priority
86
difference between CVL and MVL
MVL actually starts from company - whole point is when they want to stop trading
need to make sure its solvent (declaration of solvency)
difference also is that in CVL creditors control winding up so their choice of liquidator is over SH choice
otherwise process quite similar
in both directors will lose power but stay in office
87
main points compulsory liquidation
creditors must apply to court and company must be insolvent!
1) creditors will present winding up petition in court
2) company unable to dispose of assets
3) petition appears in london gazette within 7d
4) court hearing fixed
5) court makes winding up order, which is also exposed in London gazette
6)creditors can appoint an independent insolvency practiioner, or company appoints through OR
7)liquidation starts and dissolved within 3 months
directors powers totally terminatted
88
main difference between compulsory liquidation and CVL/MVL
compulsory is when company is insolvent and is started by the creditors - involves court, need petition and court will fix trial date
- notices are posted in london gazette
- director's powers are totally terminated
89
order of payment in liquidation
1) fixed charge holders
(if shortfall, will rank as unsecured creditors)
2) liquidator's expenses
3) preferential creditors
4) ring fencing
5) floating charges (order of priority)
6) unsecured creditors
7) shareholders
90
liquidator's duties during liquidation
must run company, carry on its business, commence/defn liquidation, investigate past transactions, investigate conduct of directors and collect/distribute assets and facilitate winding up
91
what are the claims liquidators can bring
the claimant is actually the company
- wrongful trading
- fraudulent trading
-avoidance of floating charges
- preference
- transactions at undervalue
-transactions dafrauding creditors
-extortionate credit transaction
92
main points wrongful trading
directors continued to trade when they knew or should have concluded that there was no reasonable prospect the company would avoid insolvency
93
defences wrongful trading
- took every step to minimise loss (judged according to objective standard of person in that position) (subjective- what that director knew)(and objective - what would a director in tht position do)
- sought professional advice and has maintained records
94
main points fraudulent trading
business was carried out with the intent to defraud creditors
- must show intent to defraud
defence:
- reasonably believed things would get better
95
misfeasence
breach of fiduciary duties or other owed by directors
- in winding up, may be required to contribute to company's assets by way of compensation + repay/restore/account for any money or property applied in breach of duty
96
what is the 'onset of insolvency' date for claims against directors purposes?
- compulsory: date winding up petition is presented
- CVL: date liquidation formally entered
- administration: earlier of filing notice of intent to appoint administrator or date it actually enters in administration
97
avoiding floating charges main points
- makes charge automatically void (dont need to challenge it) if was granted at relevant time without fresh consideration = any more paid pursuant to charge can be clawed back and security released
- relevant time: 2 years for persons connected
12 months for anyone else
- floating charge to someone unconnected: company must have either been insolvent or become as a result
(there is no need to show this for connected person - presumption of insolvency))
-->A/L can get injunction against charge holder who still tries to enforce it
98
preference main points
there has been ACTUAL DESIRE to put someone in a better position that they would be
- must challenge the transaction
- relevant time 2 years for connected, 6m for unconnected
- company must have been or become insolvent as a result (no presumption)
- presumption of desire if was someone connected (no presumption if unconnected)
99
main points transaction at undervalue
- must be challenged
- company makes gift or sale receiving consideration significantly lower than market value
- relevant time: 2y (for everyone)
- presumption that was insolvent/became as result for connected person, otherwise have to prove
defences:
- entered with good faith
- for purpose of carrying out business
- reasonable grounds to believe would benefit business
100
main points transaction defrauding creditors
challenges are at court's discretion - transaction entered with the intent to put assets beyond reach of creditors or prejudice their interests
--> party may need to return property/discharge security
- really hard to prove intent
- only advantage is that there is no time limit - so basically use this as backup if 2y timelimit for undervalue has passed
101
main points extortionate credit transactions
- must be challenged
-requires a grossly exorbitant payment to be made in 3y before insolvency (or grossly contravenes principles of fair dealing)
102
text to change company's articles (draft)
resolution (member): amending company's articles of association
That with effect from the conclusion of the meeting the articles of association of the Company would be amended by deleting article NUMBER and replacing it with the following article NUMber:
(instert word by word of article) (in the form set ou in the Appendix to this notice)
103
board minutes checklist (draft) (example- change company name)
- present/in attendance
- chairperson (NAME) was appointed, declared that due notice had been given +meeting was quorate ACCORDINGLY declared meeting open
-business of the meeting (chairperson reported business of the meeting was ...)
GM
-produced to the meeting a notice covening a general meeting was (time/date/place) to propose the following special resolution
- was resolved to convene general meeting (info) AND b) direct X to send general meeting notice together with a form of proxy to all those entitled to receive it
WR
- there was produced to the meeting a written resolution of the members to change the company name to X
it was resolved that
- approve WR
- send it to every eligible member and company's auditors
ADJOURNMENT
- meeting was adjourned so GM/WR could be help
- reconvened at X time and chairperson reported that GM had duly convened and that resolution proposed in GM had passed
CHANGE OF NAME
- it was resolved that XX under Article NUMBER or the articles of association of company
FILING
- at CH: copy of resolution/WR
relevant form
cheque for X in repesct of change of name
-arrange for disclosure and display of new name at company's office and stationery
CLOSE
declared closed
signature
date
104
appoint a director to do anything (draft)
That (NAME), having consented to act, be appointed as X with immediate effect from the ending of the meeting/X DATE to HOLD OFFICE UNTIL X
105
director's period of employment in excess of 2 years (draft)
That the term in the agreement proposed to be entered between X and NAME DIRECTOR, a director of the Company (Director), providing for X (employment to continue...) for a period of more than two years (cannot be terminated by X or X) (can only be terminated by C or X by notice in specified circumstances, be approved
106
declaration of directors' interest and conflicts (draft)
Notice of director's interest in a proposed contract or arrangement with company (section 177(1), Companies Act 2006).
To: The Directors of [NAME OF COMPANY]
[DATE]
107
declaration of interest (draft)
for the purpose of s(177/182) of the Companies Act 2006 and (specify relevant article in company's AA), I declare that I am interest in (describe existing/proposed transaction) and the nature and extent of my interest is (describe)
Yours faithfully
Sign
108
declaration of interest other example (draft)
To: The Directors of [name of company]
[DATE]
Dear Sirs and/or Madams
General notification of interest in transactions or arrangements
For the purposes of section 185 of the Companies Act 2006, I hereby give you notice that:
I have an interest in the following bodies corporate or firms and am to be regarded as interested in any transaction or arrangement that may, after the date of this notice, be made with any of these bodies corporate or firms:
-Name of body corporate or firm
-Nature and extent of interest in body corporate or firm
I am connected with the following persons and am to be regarded as interested in any transaction or arrangement that may, after the date of the notice, be made with any of these persons:
-Full name of connected person
-Nature of connection with the person
Yours faithfully,
[Director]
109
members' resolution approving SPT (draft)
That the (purchase)(sale) by (status + name), of (description of non-cash asset) for the sum of £ (from/to) (name person/company) being a (company or person) connected with (name director) a director of X (name of holding co) be approve
110
members approving loan to director (draft)
that in accordance with section 197 of the CA 2006
- loan from X
- to X, a director of X (name of holdco),
- details of which are set out in a memorandum dated (date) which has been available for inspection by the members of the Company both at this meeting and at the Company's registered office for not less than 15 days ending with the date of this meeting, be approved
111
board minutes with declaration of interest (draft)
this is more a formality - isnt necessarily a conflict of interest but do it to be safe
--> is useful if there is a share transfer between members, or buying something from company even if under SPT exemption
- after chairperson and notice of quorum, add heading
DECLARATION OF INTEREST
'The following directors declared the nature of their interest in the proposed transaction (and other arrangements) to be considered at this meeting in accordance with s177 CA 2006, as follows:
- then add table with name of director on one side and extent and nature of interest on the other side
112
declaration of interest formality to add in board minutes (draft)
if there is some interest:
-the following directors declared .... (add table)
-a notice of declaration of interest by X dated X sent to the other directors of company under s184
OR
if there is none, just to be safe:
(each of the directors present confirmed that they had no direct or indirect interest in any way with the proposed transaction to be considered at the meeting which they were required by s177 CA 2006 and the Company's AA)
113
if company has special article relating to MA14 - how to draft in board minutes?
you add it in the first heading (chairperson, after declaring meeting open)
- it was noted that pursuant to XXX, a director may XXX subject to any restriction imposed under article XXX
114
drafting for board minutes when MA 14 but to stay meeting is still valid
--> make sure to put that in the first section, after meeting declared open - important formality
It was noted the director[s] so interested would not vote or count as part of a quorum on any of the matters in which they were [respectively] interested but that, nevertheless, there would be a quorum for all items of business to be transacted by the meeting.]
115
drafting board minutes to allow share allotment
make sure to say in business of meeting that it was to approve:
- circulation of a written resolution to obtain shareholder approval to authorise allotment of shares, namely to:
a) authorise the directors to allot shares up to an aggregate nominal amount of X
b) disapply the statutotry pre-emption rights under s561 CA
--> then add 'documents produced to the meeting' section
add list of persons for allotment and number of shares they'd get
--> report company received payment in full for subscription monies
--> say WR was approved
116
documents in share transfer (board minutes draft)
there was produced to the meeting
- stock transfer form (duly/to be) executed by X in respect of (number)+(class) shares of £X each in the capital of Company to X
make table with name of transferor, name of transferee, number and class of shares
after careful consideration, it was resolved that the registration of the transfer would promote the success of the company for the benefit of its members as a whole
it was further resolved to:
- approve the transfer produced to in the meeting
-subject to registration of transfer, a new share certificate executed by X
filing:
-The chairperson instructed [the Company Secretary OR [NAME]] to [make all necessary and appropriate entries in the books and registers of the Company] [and] [to arrange for the necessary forms and documents to be filed at Companies House].
(change members register, PSC, notify registrar of companies of changement)
117
minutes of GM (draft)
same thing as BM basically but if its short notice need to have a heading:
CONSENT TO SHORT NOTICE
The chairperson announced that [all the members of the Company having the right to attend and vote at the meeting OR a majority of the members of the Company having the right to attend and vote at the meeting and together holding not less than [95 OR 90]% in nominal value of the shares giving that right] had consented to the meeting being at short notice.]
- when talking about resolutions, say if OR or SR and if was proposed to vote on poll or show of hands and resolved to be approved as
+ insert precise text of resolution
--> if people were voting via proxy, need to have a special paragraph for that
'announced proxy votes cast were as follows
1) number of proxy votes
2) for
3) against
4) abstentions
5) chairperson's discretion
--> then repeat this formula for each resolution, under a heading
118
circulating written resolution (draft)
propose that X and Y be OR/SR
Z and W be OR/SR
OR
full text of each
SR
full text of each
- include how to signify agreement, (aslo hand/post/fax/email), cannot revoke once indicated, proxy..
119
how do define personal insolvency
1) debt is payable now and they can't repay it
2) debt is payable in the future and they have no prospect of paying it
(this is not the same thing as proving it)
120
how to prove personal insolvency
1) serve statutory demand of £5,000+ for debt and wait 3 weeks to see if pays or applies to have it set aside
2) serve a statutory demand of £5,000+ and wait 3 weeks and see if has prospect of paying or they apply to set aside
3)obtain a court judgement for £5,000 and attempt execution without success
121
what is the aim of personal insolvency
is to ensure bankrupt pays as many debts as possible (so they are discharged of their debts)
--> usually lasts 1 year
122
how can personal insolvency be initiated
through a creditor or the debtor themselves
123
how does the debtor initial personal insolvency
they just apply online on the grounds that they can't pay debts (adjudicator refuses or grants order within 28d)
--> need to pay fee for application and a deposit for the trustee in bankruptcu
124
how does a creditor apply to initiate personal insolvency
1) present petition to court (show have proven insolvency by one of the 3 grounds possible)
(creditors owed less than £5k can team up together)
2) present this at the debtors local county court centre
3) creditors pay a deposit (court fees + deposit for trustee)
4) arrange for service on debtor - PERSONAL SERVICE (unless debtor avoids agent - then can be substituted service)
(person handing statement must give witness statement)
125
what's the role of the official receiver in a personal bankruptcy
1) act as trustee - debtor's property automatically vsts in them
2) dispose of goods, repay debts, investigate affairs and challenge transactiosn
126
time limit for transaction at undervalue for personal insolvency
5 years (as opposed to 2 for companies)
- must show company was insolvent/entered into insolvency as a result only if transaction is over 2y old
- if connected person: presumed insolvency
127
what property vests in trustee in persona insolvency
basically everything that's needed for day-to-day - personal earnings for domestic purposes (can be replaced if too high value), tools of trade, property belonging to another
--> home also passes to trustee, but if someone else has legal or equitable interest, need a court order to evict (court weighs up all circumtances)
--> debtors loses ownership for up to 3y (can't occupy certain professions)
128
order of distribution of assets in personal insolvency
1) secured creditors (charged assets)
2) bankruptcy fees
3)preferential debts (includes wages/salary of employees for work carried out in the 4 months immediately before the bankruptcy of their employer, up to a maximum of £800, plus accrued holiday pay owed to employees
HMRC is a secondary preferential creditor (But is still preferential))
4) ordinary unsecured debts
5) postponed creditors (spouse or CP)
129
restrictions in personal insolvency
1) business
2) personal
3) orders and undertakings
130
business restrictions in personal insolvency
a) debtor can keep items needed for work (including vehicle)
b) CRIMINAL OFFENCE to obtain over £500 of credit without disclosing bankruptcy
c) cannot be director of company, involved in any management or formation role without COURT PERMISSION
d) cannot trade under different name without disclosing they are bankrupt
e) cannot continue in PA (unless PA varies default position)
131
personal restrictions in personal insolvency
a) cannot obtain credit for more than £500 without disclosing bankruptcy
b) cannot have CREDIT CARD or normal current account
c) cannot practice as solicitor without leave from SRA
132
how long do bankruptcy restrictions and orders generally last
between 2-15y made by court
133
difference between Bankruptcy Restriction Order (BRO) and Bankruptcy Restriction Undertaking (BRU)
BRO made by court
BRU not by court
in both:
- cannot act as director
- cannot be involved in formation/management of company
- cannot be MP
- cannot be insolvency practitioner
- cannot get over £500 without disclosing bankruptcy
134
what happens when personal bankruptcy is discharged
after 1y
property is not reverted without court order (only matrimonial home)
released from debts but may have payment conditions
135
what are the challenges a trustee can make regarding personal bankruptcy
1) t@u (5y)
2) disclaim onerous prop
3) set aside preference
4) transaction defrauding creditor
5)avoid extortionate credit transactions
136
whats an Individual Voluntary Agreement (IVA)
alternative to personal insolvency
--> binding arrangement with unsecured creditors to avoid bankruptcy and good because avoids publicity, court exam and restrictions a bankrupt would undergo + low cost
--> debtor applies for moratorium (only whilst IVA is being decided)
- makes formal proposal
- need 75% approval in value of unsc. creditors and 50%+ of non-connected creditors
= binding on all unsecured creds
- if debtor does not comply or is found to have given false or misleading info, any of the creditors can petition for bankruptcy
137
what's a debt relief order
alternative to personal bankruptcy, need to meet criteria:
- debt less than 30k
- assets less than 2k
- car less than 2k
- no house
- no other insolvency procedure
- no DRO in past 6y
- disposable income less than £75/month
--> same restrictions apply to bankrupt and may last up to 15y if they are dishonest
138
what's a debt respite scheme
you should apply if you have a debt problem and gives you 60d protection in which most enforcement action and charges/interest are paused
(also have mental health pause of 30d)
--> need to apply and show you cant pay debt and arent undergoing any other type of bankruptcy procedure + no other breathing space for past 12m
139
what's the point of administration as opposed to liquidation
admin wants to rescue the company as a going concern, and if this is not practicable, to achieve a better result for creditors than would be achieved by winding up - and if this is not possible, to sell assets to pay one or more preferential creditors
- managed through a moratorium (cant commence or continue claims) which ends after 1y (as does adminsitration - can apply to extend)
140
procedure COURT route administration
1) (directors, company or any creditor) apply on grounds that C can't pay debts and likely to reach one of the 3 aims of administration
2) notify every person who has appointed/entitled to appoint admin and any QFCH
141
what's a QFCH
- floating charge must be enforceable (= one or more payments missed)
--> CHARGE OVER WHOLE OF COMPANY'S UNDERTAKING
- states theyre entitled to
142
procedure for admin OUT of court route
1) (anyone + any QFCH) must serve notice of intention on court and other QFCH and lenders
2) directors file statutory declaration: declaration than the company cannot pay its debts BUT is not in liquidation (= cannot use this is compulsory winding up petition has been presented, would need to ask court)
3) QFCH or lender can appoint receiver
4) moratorium comes into effect immediately when intention to appoint is filed at court
--> proposals need to have majority of creditors and 50% of non-connected creditors
143
what are the functions of an administration
1) act in interest of creditors as a whole
2) remove/appoint directors
3) call meetings, deal with property under floating charges and investigate past transactions
4) need PERMISSION to deal with FIXED CHARGE property
144
whats a Company Voluntary Arrangement (CVA)
option outside admin/liqui - undergoing temporary cash flow issues but fundamentally sound
written agreement with unsec. creditors (they're not likely to be paid in full but more than in other process)
--> need 75% UNSECURED cred approval + 50% un-connected cred + 50% SH
- secured creditors cannot vote
--> only binds in relation to past debts
insolvency practitioner supervises it
- insolvency practitioner supervises the arrangement and implementation and proposals of CVA
145
are secured creditors entitled to vote on CVA?
are entitled but no compulson
+
will only be bound if they vote
146
whats a CIGA moratorium
arrangement between C, SH and secured and unsec. creditors
--> basically period where creditors cannot exercise their usual rights
during which, creditors' remedies are mixed (proceedings are stayed, winding up cannot be commenced, securities cannot be enforced, and administration cannot be commenced) APART FROM WAGES; LOAN PAYMENTS OWED TO BANK and MONITOR's EXPENSES
1) file court statement that unlikely to pay debts as they fall and moratorium will help as going concern
147
how long does a CIGA mortatorium last
20 business days from day of filing, but can be extended to 20 more if creditors accept
148
who is in control during CIGA mortatorium
directors, but theres an insolvency practitioner supervising
149
when can you not enter a CIGA moratorium
a) youre a bank
b) youve had on in sat 12m
c) you have an outstanding winding up petition against you
150
whats a CIGA restructuring
1) initiated by directors or creditors (directors usually dont have enough info) (binds all parties, not just unsecured creditors like CVA)
2) NO need to be insolvent to enter
3)2 hearings: directors prepare plans
a) CR make representations
b) court makes decision
4) enabes cross-class cram down provisions
entire class demed to vote if 75% in favour
151
what are the alternatives to admin/liqui
1) CIGA restructuring
2) CIGA mortatorium
3) Company Voluntary Arrangement (CVA)
4) receivership (for secured cr)
a) fixed charge (LPA receiver) (need not be insolvent)
b) floating charge (admin receiver) (need not be insolvent)
152
whats a fixed charge LPA receiver
receiver appointed by fixed charge holders who sell charge to repay charge holder (but the charge holder becomes unsecured cre if sale leaves shortfall)
153
whats an administrative receiver
appointed by floating charge holders who have charge over C's ENTIRE undertaking
--> receiver runs company and sells charged assets
154
what options do secured cr have facing potential insolvency
1) fixed charge holders: LPA receiver
2) floating charge hold: Admin receiver
3) QFCH: appoint administration (out of court route)
155
big point to think about ST wanting to become company
obviously liability
ability to take out loans - more options as a company because more assets can have charge over (however con is that bank might ask for personal guarantee = personally liable if default)
156
Board resolutions required after OR agreeing buy back of shares
2!!
1- to enter buy back agreement
2- to authorise one director to enter agreement on behalf of the company
157
what to do before granting securty
check articles to see if they rpevent
158
what to do after granted fixed charge over land
register at land registry and CH within 21 d
159
effect of not registering a charge
charge holder becomes unsecured creditor
160
whats subordination
agreement between the creditors themselves to alter the order of priority
161
whats the point of a DRO
lasts 12 months, during which you stop paying debts - might not have to be able to pay them in the end
negative is that you undergo same restrictions as in bankrupty - can last up to 15y and it stays on your file for that time = affects ability to get credit
162
advtange of DRO, debt respite scheme, IVA over informal negotiation
that in informal negotiation other creditors can still issue a bankruptcy petition
163
