BLP Flashcards
What are the 5 main business mediums?
(1) sole trader [unincorporated]
(2) general partnership [unincorporated]
(3) limited liability partnership
(4) private company
(5) public company
What are the characteristics of a limited partnership?
at lease one general partner has unlimited liability for the partnerships debts + there can be one limited partner whose liability is limited to the amount they initially invested in the company
*limited partner must not control or manage the partnership, have the power to take binding decisions on behalf of the limited partnership, remove their contribution to the limited partnership for as long as it is in business
*must be registered at Registrar of Companies
[rare in modern business practice]
What are the main advantages of being a company?
(1) separate legal personality: personal assets are safe from creditors - as long as a company is legally incorporated, it must be treated like any other independent person with rights and liabilities (this protects directors)
(2) limited liability: the liability of an individual who owns shares in the company is limited to the amount they paid or agreed to pay for their shares (therefore if a shareholder has not paid up the whole value of their shares, company can call for all or the remaining share capital contribution to be paid) [may be liable to contribute if wrongdoing]
When would the corporate veil be pierced?
when a person is under an existing legal obligation or liability or subject to an existing legal restriction which he deliberately evades or whose enforcement he deliberately frustrates by interposing a company under his control - court may pierce only for the purpose of depriving the company or its controlled of the advantage that they would otherwise have obtained by the company’s separate legal personality
What are “one man” companies?
one man company: a company with one shareholder - this is a legitimate creation provided it is validly formed and complied with the formalities required by law (Salomon) + company will still standard as an independent person with its own rights and liabilities
What are the specific requirements for a public limited company?
(1) constitution must state that it is a public company
(2) name: includes “public limited company” or plc
(3) company must have allotted shares with a value of at least £50,000 (minimum share capital requirement)
How are limited liability partnerships run + taxed?
run like a general partnership, enjoys separate legal personality, members will pay income tax on their share profits made by the LLP (does not depend on distribution)
What are some factors to consider when advising on the best business medium?
(1) costs
(2) formalities
(3) ability to give charges (floating only available to incorporated entitites)
(3) disclosure - e.g. accounts and publicity of information
(4) ownership of assets/property - owned by the sole trader or members unless incorporated business (separate legal personality)
(5) international recognition - LLPs are not widely-recognised worldwide
How many owners/managers do you need in LLPs, private companies, public companies?
*LLPs: at least 2 members and 2 must be designated members (act as owners and managers)
*private limited company: shareholders are the owners - at least 1 / at least 1 director to manage
*public limited company: shareholders are owners - at least 1 / at least 2 directors to manage + 1 qualified secretary required
What information will be published for a sole trader?
*no accounting requirements
*only name and address for service must be disclosed
What information will be published for a general partnership?
*accounts must be produced but are not audited or published
*only name and address for service must be disclosed
What information will be published for LLPs, private companies, public companies?
*accounts audited and published (unless abbreviated and/or exempt for LLPs and private limited companies)
*records at Companies House open to public inspection
*directors’ residential address will not appear on the public register, but are shared with specific public authorities and credit reference agencies (directors can ask for this not to be shared, but there must be a serious risk of violence or intimidation for Companies House to accept application - e.g. company engaged in controversial activities like animal testing)
When does a company come into existence?
upon certificate of incorporation being issued - certificate (as conclusive evidence that the requirements of registration have been complied with) must state:
*name and registered number of the company
*date of company’s incorporation
*whether it is a limited or unlimited company, and if limited, whether it is limited by shares or guarantee
*whether it is a public or private company
*whether the company’s registered office is situated in England and Wales, in Scotland, or in Northern Ireland
How does a company register for corporation tax?
companies formed following an application made by post, using a formation agent, or using third party software must make an application to HMRC for registration within 3 months of starting to do business (if company is formed via online application, registration is done automatically)
How can you convert a private company into a public company?
*must pass special resolution approving re-registration of the company + alter company’s name and articles so that they are in a form suitable for a public company
*will not need a trading certificate to continue trading (new certificate of incorporation is sufficient) as Companies House will not re-register the company unless it has satisfied the same conditions regarding its alloted share capital that it would have to show in order to obtain a trading certificate [cf registering on the outset as a public company: will need a trading certificate before commencing trading]
applicant must file: special resolution, application for re-registration Form RR01, fee for re-registration, revised articles, balance sheet and written statement from auditors + a valuation report on any shares which have been allotted for non-cash consideration between the date of the balance sheet and passing of special resolution
How can a company adopt a seal?
by board resolution
*companies usually choose to have a seal to make their company documents look more official
What is the accounting reference date for a newly incorporated company?
*date to which it must prepare its annual accounts (company may make its accounts up to 7 days either side of their accounting reference date)
*this will be the last day of the month in which the company was incorporated
What will form part of a company’s constitution?
*memorandum of association
*articles of association
*certificate of incorporation
*current statement of capital
*shareholder resolutions and agreements
*court orders and legislation which affect the company’s constitution
What information will be needed to fill out Form IN01 for incorporation of a company?
(1) company name (need not be trading name)
(2) address of registered office [where correspondence from Companies House/any official documents will be sent + where certain records must be kept]
(3) name, residential&service addresses, DOB, nationality, occupation of first directors
(4) company secretary if business chooses to have one: name, service address
(5) first shareholders: name, address, details of shareholding
(6) statement of capital: number of shares of each type the company has and their total nominal value + what rights each type of share gives the shareholder (“prescibed particulars”)
(7) whether there will be a person with significant control
What are the default articles pre and under CA 2006?
*pre-CA 2006: Table A articles (unless modernised by adopting the Model Articles or an amended version of the Model Articles)
*CA 2006: Model Articles
What is the memorandum of association?
[legal] statement that the subscribers (1) wish to form a company and (2) agree to become a shareholder and (3) take at least one share each - must be signed by each subscriber and in the prescribed form
(cf articles set out how the company is run, governed, and owned)
*before CA, company’s memorandum included provisions which now fall within the articles of association (e.g. “objects clause” restricting company’s powers)
When does a partnership arise?
when two or more persons are carrying on a business in common with a view of profit
- parties must have agreed to commence business, but it is not necessary for trading to have commenced
- no formalities
*consider if the individuals all take part in decision-making, property acquired and how, the sharing of profits
partners may want to insert a date on the partnership agreement if one is written, however solicitors should advise clients that if they begin work on partnership busienss before the commencement date shown, partnership may come into existence on the earlier date and the default terms set out in PA 1890 will apply until the commencement date set out
What sections of PA 1890 cannot be overriden?
section 1-2 governing when a partnership comes into existence, and section 5-18 covering the relationship between partners and third parties
When is a partnership advisable?
parties want to start business as soon as possible with little admin + don’t want information about business to be made public - partnerships can be started with no formalities and are not as heavily regulated as companies
partnerships do not benefit from separate legal personality or limited liability, therefore consider the risks parties would be taking on - if business is one that is insured, actual liability is likely to be low
What are the rules imposed on partnership names?
*must not include ltd/limited, limited liability partnership/LLP, public limited company/plc
*must not be offensive
*must not be the same as an existing company (exception: proposed new entity will be part of the same gorup as the company/LLP with the existing similar name, and applicant has written confirmation that the company/LLP does not object)
*must not contain a sensitive word or expression (e.g. denoting regulated professions, geographical areas, words implying national or international pre-eminence) or suggest a connection with government or local authorities without permission from Secretary of State
*names cannot exceed 160 characters, including spaces
What happens if:
1) partners carry on a business after the expiry of a fixed term (as prescribed in the contract), and
2) do not enter into a new agreement?
they are presumed to be partners on the same terms as before
Are partners required to take part in the management of the business?
no obligation under PA 1890, but they may (power)
How are decisions made in partnerships without bespoke agreements?
unanimous decision:
1) change nature of business
2) introduce a new partner
3) change terms of the partnership agreement
other decisions must be taken by majority
How do partners share capital and profits of the business under PA 1890?
equally regardless of capital contributions
*this can be varied by implied agreement e.g. conduct in circumstances where a partner has acted in a certain way over a period of time and the others have not objected
What is partnership property and how is it treated differently from property which belongs to specific individual partners?
property originally brought into the partnership stock or acquired for the purposes and in the course of the partnership business
note that a partnership does not have a separate legal personality and cannot own assets in its own name - therefore property is normally held in the name of individual partners who hold as trustees for the partnership
on insolvency of a partnership and the bankruptcy of individual partners, the partnership assets are applicable in the first instance to pay the partnership’s creditors (in priority to a partner’s individual creditors) with any unpaid balance of those creditors being met out of the partners’ individual estates / creditors of the firm and creditors of the individual partners rank equally with respect to the partner’s individual estate
When is a partnership dissolved under PA 1890?
1) partner gives notice of retirement - there is no requirement for the notice to be of a certain length of time or for the notice to be in writing [where no fixed term has been agreed upon for the duration of the partnership, therefore is a partnership at will]
2) on expiry of a fixed term
3) if the partnership was entered into for a single adventure or undertaking, by the termination of that adventure or undertaking
4) by the death or banruptcy of any of the partners
5) by an event making it unlawful for the business of the firm to be carried on or for the members of the firm to carry it on in partnership
6) by the court on the application of a partner
What should solicitors advise clients on with regards to giving notice for dissolution?
as no formalities under PA 1890, advise clients to include notice period, stipulate that notice must be given in writing, and a provision that notice to retire from the partnership cannot be give in, e.g. the first year of trading (to ensure that the partnership has the chance to become established)
What are the grounds for dissolution by court order?
1) a partner becomes permanently incapable of performing their part of the partnership
2) a partner’s conduct is calculated to be prejudicial to carrying on of business
3) a partner wilfully and persistently breaches the partnership agreement
4) the partnership can only be carried on at a loss
5) the court thinks that, for other reasons, it is just and equitable to order that the partnership be dissolved
What is an outgoing partner entitled to upon dissolution under PA 1890 and what advice should be given to avoid this?
outgoing partner can insist on the business being sold (under section 39 PA 1890) + advised should include a clause [A] that in the event of a partner leaving, remaining partners can continue in partnership (technical dissolution as partnership will continue seamlessly with one less partner)
court can, if it appears preferable on a general dissolution, require one or more of the other partners to buy out another partner of the partnership rather than effect a winding-up of its business and affairs
include provisions [B] setting out whether the other partners must buy the outgoing partner’s share or whether they merely have the option to do so, how the partnership share of the outgoing partner should be valued (consider goodwill), and when they should be paid (e.g. in instalments for other partners to be able to afford to buy them out or more time to find a buyer rather than having to sell assets individually to raise money quickly)
without provision [B], outgoing partner is entitled to interest at a rate of 5% per annum on the value of their partnership share or such share of the profits as the court may find attributable to his/her share of the partnership assets
What is the order of distribution of proceeds of sale under PA 1890?
1) creditors of the firm must be paid in full + if there is a shortfall, the partners must pay the balance from their private assets [sharing losses equally]
2) partners who have lent money to the firm must be repaid the amount outstanding on the loan, including interest
3) partners must be paid the share of the partnership’s capital to which they are entitled
4) surplus is shared between the partners equally
When does a partner have authority to act in winding up the business’s affairs?
if they are not bankrupt (if they are bankrupt or dead, trustee in bankruptcy or PR has authority)
What are restraint of trade clasues?
Why are they commonly included in partnership agreements?
provision which seeks to restrict outgoing partners in their business dealings once they have left the partnership - there is no implied restraint of trade clause in PA 1890
can include non-compete, non-solicitation, non-dealing + will only be enforceable if it protects a legitimate business interest (e.g. goodwill, business contracts) and is no wider than reasonable to protect that interest
What is the procedure for retirement from a partnership which was originally constituted by deed?
notice in writing, signed by the partner giving it
Can a majority of partners expel any partner?
no, unless a power to do so has been conferred by express agreement between the partners
What are the partners’ responsibility under PA 1890?
duty of utmost fairness and good faith towards one another
*to be completely open with one another regarding any relevant information regarding the partnership
*account to the firm for any private profits they have earned without the other partners’ consent from any transaction concerning the partnership
*not compete with the firm - however, if the partner does so without the other partners’ consent, that partner must account for and pay over to the firm all profits made by them in the competing business
*bear share of any loss made by the business, in accordance with the terms of the partnership agreement
*indemnify fellow partners who have borne more than their share of any liability of expense connected with the partnership
When does a partner have actual authority to bind the partnership?
1) partners acted jointly in making the contract
2) partners expressly gave one of the partners permission to enter into a particular transaction or type of transaction, or instructed them to enter into a partnership contract on behalf of the firm
3) partners may have impliedly accepted that one or more partners have the authority to represent the firm in a particular type of transaction (e.g. regular course of dealing by one of the partners to which the other partners have not objected)
When does a partner have apparent authority to bind the partnership?
1) objective limb: transaction is one which relates to business carried on by the firm - expenditure in the realm of normal business activity/maintaining an office is deemed to indirectly relate to business
2) objective limb: transaction is one for which a partner in such a firm would usually be expected to have the authority to act [look at value of transaction!]
3) subjective limb: the other party to the transaction did not know that the partner did not have authority to act
4) subjective limb: the other party deals with a person whom they know or believe to be a partner
What is the consequence of a partner binding the partnership with apparent authority?
firm will be liable to the third party under the contract + the person who has made the firm liable by virtue of their apparent authority is liable to indemnify their fellow partners for any liability or loss which they incur, because the partner has breached their agreement with their partners by acting without actual authority
How are partners liable for the debts incurred by the partnership?
jointly and severally - therefore, there are 3 possible defendants for any person seeking to enforce liability of the firm:
1) partner or partners with whom they made the contract
2) anyone who was a partner at the time debt was incurred + that partner can claim indemnity from their partners so that the partners share liability between them
3) the firm! - best option as this ensures the judgment can be enforced against the partnerships assets, and if necessarily, against partners’ personal assets (+ anyone who was a partner at the time when the debt was incurred is jointly liable to satisfy the judgment)
How can an outgoing partner escape liability for debts incurred before retirement [i.e. entered into contract - date of alleged breach and proceedings are irrelevant]?
enter a novation agreement (with creditor and other partners, and possible an incoming partner) to transfer resopnsibilities and obligations to a third party
if there is no incoming partner, the novation agreement is only contractually binding if there is consideration for the creditor’s promise to release the retiring partner from liability or contract is exectued as a deed
+ if no novation agreement, retiring partner can be pursued for the full extent of the debt, but will be able to claim a contribution from the other partners provided they are solvent
How can an outgoing partner escape liability for debts incurred after retirement?
make sure (compliance with section 36 PA 1890 notice requirements):
1) anyone with whom the firm has dealt with before is given actual/direct notice of the partner in question leaving
2) a notice is placed in the London Gazette notifying “the whole” of the partner’s departure - not necessary if ceasing to be partner because of death or bankruptcy
if (1) and (2) have not been complied with and partner is sued, may be possible to claim an indemnity from the other partners
3) partner’s name is removed from firm’s stationery, website (holding out) + ensure misrepresentations are not made by the retiring partner or with the retiring partner’s knowledge - **to be liable when such procedures have not be abided by, creditor must have relied on the holding out
What happens when a partner leaves in the partnership bank account a sum of money to pay their share of any outstanding debts? Or the valuation of their share takes into account debts/liabilities?
partner would have paid share of debts and cannot be asked for contributions after retirement - this does not affect a third party’s right of action against the retired/retiring partner, but instead if they are pursued, the remaining partners must indemnify
What are the similarities and differences between a general partnership and a limited liability partnership?
few administrative requirements than company like GP, but enjoys the advantage of limited liability like companies
What are the legal requirements for the formation of an LLP?
1) there are at least 2 members
2) there are 2 designated members
3) LL IN01 form is filed at Companies House, along with the applicable fee
4) normal name restrictions + name must end in LLP, limited liability partnership, or Welsh equivalents
5) name must be displayed at LLP’s place of business and its stationery must state its name, place of registration, registration number, and address of registered office
6) LLP must have a registered office
What are the duties and responsibilites of designated members of an LLP?
1) signing and filing the annual accounts with the Registrar
2) appointing, removing, and remunerating the auditors
3) filing the annual confirmation statement
4) sending notices to the Registrar - e.g. member leaving (LL TM01 for individual; LL TM02 for corporate member) or joining LLP (LL AP01 for individual; LL AP02 for corporate member [will need service address, residential address, full name, former names and date of birth]) [notice sent within 14 days]
5) winding up LLP
core fiduciary duties (good faith, account for any money received on behalf of the LLP, duty to other members to render true accounts and full information on matters concerning the LLP) + duty of reasonable care and skill owed to the LLP
When does a member of an LLP have authority?
members are agents of the LLP and the LLP will be bound by anything done by a member on its behalf unless no authority (consider actual and apparent authority - contract rules)
What happens if the number of members in an LLP reduces to 1?
person is jointly and severally liable for any of the LLP’s debts incurred during the period from the 6-months point onwards
What is the effect of limited liability for LLPs?
company liquidation regime under Insolvency Act applies, but member may be liable for misfeasance, fraudulent trading or wrongful trading
Can an LLP own property?
yes, LLP itself will be the legal owner
What types of charges can an LLP issue?
fixed and floating charges + LLP must keep a register of charges, along with a copy of every charge requiring registration, at its registered office [any creditor or member of the LLP must be allowed to inspect the register free of charge] + LLPs are required to register charges with the Registrar
What is the default position with regards to the sharing of capital and profits in LLPs?
members of the LLP share equally + there is no default position on losses as they are borne by the LLP itself
What is the default position with regards to management and decision-making in LLPs?
every member may take part in the management of the LLP + members are not entitled to remuneration for taking part in management (same position as GP**)
changing nature of business, introducing members, and altering terms of the contract between the members can only be done by unanimously
What is the default position with regards to members leaving an LLP?
members can leave by giving reasonable notice to the other members + no expulsion
What are the requirements for calling a board meeting?
*notice must be given to other directors (by director or director require company secretary to give notice)
*notice must be reasonable (what is reasonable depends on the facts + in any case, 24 hours is sufficient)
*notice must include time, date, and place of meeting - if it is not intended that directors should meet in the same place, notice must state the method of communication (any method is acceptable as long as directors can each communicate)
*notice does NOT need to be in writing
Who is counted in the quorum and votes in board meetings?
*quorum of 2 directors must be present at all times during a board meeting (a sole director can be quorate)
*a director may not count in the quorum or vote if director has an interest in the proposed transaction/arrangement (subject to company’s Articles) - unless permitted cause: subscription of shares of the company, arrangements pursuant to which benefits are made available to employees and directors or former, guarantee given by or to a director in respect of an obligation incurred by or on behalf of the company
How are board resolutions passed?
by simple majority (more than half) + each director has one vote, unless board has appointed one of its directors as chair (they will have a casting vote in the event of a tie - only use when in favour)
How can a board resolution be passed without holding a board meeting?
e.g. resolution in writing
*possible as long as it is shown that all eligible directors have indicated to each other that they share a common view on a matter: directors have to vote unanimously (and written record of decision to be kept)
How can directors call a general meeting?
paassing a board resolution - resolve to call a general meeting
*notice must be given to every shareholder, every director, and an auditor if there is one
*notice must be given in hard copy, in electronic form, or by means of a website (or combination)
[notice by website: members will be notified of notice’s presence on website - notification must include that it concerns a notice of a company meeting, place/time/date of meeting and with public companies, whether it is an AGM + notice on website must be available throughout the period beginning with the notification date and ending with the conclusion of meeting]
*notice must include: time, date, place of meeting, general nature of business to be dealt with, reminder that each shareholder has a right to appoint a proxy to attend on their behalf (+ if special resolution, exact wording must be included) - failure to comply does not invalidate meeting but convictions for officers
*minimum notice required for a general meeting is 14 clear days (includes weekends/bank holidays but not the date of notice and meeting) - if notice is sent by post or email, deemed receipt is 48 hours after notice was posted or emailed (no account taken of any part of a day that is not a working day)
When may directors be obliged to call a general meeting (i.e. request from shareholders)?
once directors have received requests from shareholders representing at least 5% of such of the paid-up capital of the company as carried the right of voting at general meetings
*request must state general nature of business to be dealt with at the meeting
*board must call a general meeting within 21 days of request + notice period must be no more than 28 days (max period between request and general meeting itself is 7 weeks)
What are the requirements for calling a general meeting on short notice?
consent from majority in number of company’s shareholders + they must hold 90% or more of company’s voting shares (95% for public companies)
Who is counted in the quorum and votes in general meetings?
quorum: 2 qualifying persons - i.e. includes proxies and representatives of corporate shareholders (where corporate shareholder, we must see the board minutes of the shareholder authorising a corporate representative at the meeting) (subject to company’s Articles + if there is only one shareholder of the company)
shareholders are generally not prevented from counting in the quorum or vote if they have a personal interest, unless:
(a) concerns a resolution to buy back some or all of the shareholder’s share
(b) an ordinary resolution to ratify a director’s breach of duty where the director in question is also a shareholder
How can ordinary/special resolutions be passed?
ordinary: more than 50%
special: at least 75%
*default position is show of hands + poll vote may be demanded by a chair of the meeting, directors, two or more persons having the right to vote on the resolution, or a person/persons representing not less than 1/10 of the total voting rights of all the shareholders having the right to vote on the resolution
[poll vote can be demanded before GM, during (before or after shareholders have already voted on a show of hands) - if after, outcome of the poll vote will override the vote on the show of hands]
Who can propose a written resolution?
*only available to private companies
cannot be called for removing a director or an auditor before the expiration of their period/term of office
may be proposed by:
(a) directors of the private company
(b) shareholder(s) provided they have 5% or more voting rights [company’s Articles can reduce this percentage below 5% but are not entitled to increase it]
*when requested by shareholders, company must circulate a copy of the resolution and any accompanying statement (of up to 1,000 words) to all eligible shareholders within 21 days of request [shareholder who requested the cirulcation of the resolution must pay the company’s expenses in complying with the request]
What is the procedure with regards to a written resolution?
1) board to hand out, post, or email written resolution or place resolution on the company’s website - this must be circulated to every eligible member
2) information that must be included on the written resolution includes how to signify agreement and deadline for returning [by default, this is a 28 day period with circulation date being day 1]
3) shareholder will have to sign and return written resolution if they would like to vote in favour + before or on lapse date (day 28 if resolution is silent)
*written resolutions are passed when the required majority of eligible members have signified agreement to the resolution (1 vote per share - cf default position in general meetings) - there is no requirement to wait until after the lapse date or even wait for everyone to vote [written resolutions are often more practical than waiting for a general meeting notice period and easier to obtain than consent to short notice]
What steps must be taken post-board/general meeting and written resolution?
1) minutes from meetings should be recorded
2) record of minutes and outcome of any written resolutions must be kept for at least 10 years from the date of the meeting - kept at the company’s registered office or a Single Altnerative Inspection Location (which address needs to be notified to Companies House on Form AD02)
company can elect to keep records on the central register at Companies House as well
*failure to keep records is an offence committed by every officer of the company who is in default + they will be liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding 1/10 of level 3 on standard scale
What are the company’s annual responsibilities - with regards to accounts and reports?
*every company must keep adequate account records and it is the directors’ responsibility to ensure accounts are produced for each financial year
*directors of every company must prepare a directors’ report for each financial year to accompany accounts
*it is the directors’ responsibility to circulate the accounts, directors’ report and, if required, an auditor’s report to every shareholder and debenture holder and anyone else who is entitled to receive notice of general meetings (shareholders, directors)
*every company must file its accounts and directors’ report at Companies House (within 9 months for private companies + 6 months for public companies - from end of the accounting reference period)
[newly incorporated companies have the option of filing the accounts and report 4 months after the end of the company’s first accounting reference period instead]
*every company must file a confirmation statement (Form CS01) within 14 days from company’s anniversay of incorporation - ensures that information held at Companies House is correct and up-to-date (late submission is a criminal offence)
What constitutes a small company?
a company with any 2:
(1) a balance sheet total of not more than £5.1 million
(2) a turnover of not more than £10.2 million
(3) no more than 50 employees in a particular financial year
even if classified as a small company, it must still have its accounts audited if demanded by: member(s) holding at least 10% of the nominal value of issued share capital
*do not need to send director’s report to Companies House
What constitutes a micro-entity?
a company with any 2:
(a) a balance sheet total of not more than £316,000
(b) a turnover of not more than £632,000, and
(c) no more than 10 employees in a particular financial year
What is the role of a company secretary?
deals with the company’s legal administrative requirements - not required to have one in private companies (in such cases, if CA 2006 requires a company secretary to do something, it can be performed by directors or someone authorised by them)
What is the procedure with appointing/removing company secretaries?
appointed or removed by board resolution (directors using general power under Model Art 3)
notification requirements:
(1) must notify Registrar of Companies on form AP03 for a human secretary or AP04 for a corporate secretary within 14 days of appointment
(2) company must have a register of secretaries with certain specified particulars [private companies can ensure that information is filed and up-to-date on central register at Companies House rather than keep own register of secretaries]
(3) notification of removal/resignation must be made to the Registrar of Companies within 14 days on Form TM02
(4) company must notify the Registrar of Companies within 14 days of any change in particulars of the company secretary kept in the registrar of secretaries (Form CH03 for human, Form CH04 for corporate)
What is the role of an auditor?
prepare a report on the company’s annual accounts - report should state whether, in the auditor’s opinion, the accounts have been prepared properly and give a true and fair view of the company [this ensures that shareholders are not defrauded or misled by directors]
*no duty of care owed to shareholders or potential new shareholders - however auditor can be sued for negligence by the company they are auditing
What is the procedure with appointing/removing company’s auditor?
*auditor must be someone who is qualified and independent
*generally, appointed and removed by ordinary resolution of shareholders - except directors can appoint the company’s first auditor and can fill a casual vacancy
*when removing, shareholders will need to give special notice to the company of the proposal to remove
auditor can resign at any time by giving notice in writing sent to the company’s registered office
whenever auditor ceases office, they must deliver a statement to the company explaining the circumstances connnected with ceasing to hold office
What are the administrative tasks required following the transfer/allotment of shares?
*shareholders have a right to receive a share certificate + this should be issued within 2 months of transfer/allotment
*every company must keep a register of members at its registered office or Single Alternative Inspection Location (can be kept on the central register at Companies House)
*shareholders have the right to have their name on the register of members - updated as soon as practicable and, as a long stop, within 2 months of transfer/allotment
- if company has elected to keep information at Companies House, notification must be made to Registrar as soon as practicable or within 2 months
- where kept at registered office or SAIL, register must be available for inspection to shareholders free of charge or to anyone else for a fee
*it is a criminal offence if the register of members is incomplete or incorrect
Who is a person with significant control? What are the administrative tasks associated with PSCs?
any shareholder:
(a) who owns or controls more than 25% of voting rights
(b) who has the right to appoint or remove a majority of the board of directors of the company
(c) who has the right to exercise, or who actually exercises, significant influence or control over the company
*company must keep a register of persons with significant control - enables third parties to understand who holds power in a given company [company can elect to have information on the central register of Companies House instead of registered office/SAIL]
*register must be kept even if there are no shareholders on it
*PSCs can apply to keep their residential address and name private
*forms to Companies House must be filed within 14 days of changes made to the company’s PSC reigster (i.e. when someone appears for the first time, details of PSCs change, ceasing to be a PSC)
What is the contractual relationship between shareholders and the company?
company’s constitution is a statutory contract between each shareholder and the company AND between each shareholder and every other shareholder - therefore, shareholders have a remedy for breach of contract if one or more shareholders, or the company itself, does not abide by the terms of the constitution (most importantly Articles due to the significance of memorandum reducing under CA 2006)
shareholder agreements are optional and will only bind the shareholders who enter into the agreement
What are Bushell v Faith clauses?
typical clause in shareholder agreements: gives someone who is both a shareholder and a director voting rights as a shareholder if the resolution in question is a resolution to remove that person as director
What are the limitations imposed on the contents of shareholder agreements?
it cannot restrict shareholders from voting in a particular way in board meetings if they are also a director
What are the key rights of shareholders?
(1) voting rights - including sending proxy, to a poll vote, receive notice of GM, requisition GM, circulation of written resolution and accompanying statement in certain circumstances (5%)
(2) right to receive dividend as long as there are profits available and directors have made a recommendation as to its amount and this has been approved by the shareholders via ordinary resolution (for final dividends) [interim payments can be made without shareholder approval]
(3) right to apply to court for company to be wound up, on the grounds that it is just and equitable to do so
(4) right to remove director by ordinary resolution
(5) right to remove auditor by ordinary resolution
(6) right to inspect company’s minutes of GM and all shareholders’ resolutions passed otherwise, all company’s statutory registers, directors’ service contracts and any directors’ indemnities, and any contracts relating to the company’s purchase of its own shares - all without charge
(7) right to receive a copy of the company’s annual accounts and reports
(8) right to seek an injunction under CA 2006 to restrain company from doing something prohibited by its constitution
What is a subsidiary?
(a) other company holds a majority of the voting rights in it, or
(b) other company is a member of it and has the right to appoint or remove a majority of its board of directors, or
(c) other company is a member of it and controls alone, pursuant to an agreement with other members, a majority of the voting rights in it
(d) it is a subsidiary of a company that is itself a subsidiary of that other company
What must a single-member company include on its register of members?
a statement that it is a single-member company + another statement should be given when this changes on the date which it happens
What are ordinary shares?
shareholders with ordinary shares have the right to attend and vote at general meetings and are entitled to receive dividends if they are declared
What are preference shares?
shareholders with preference shares receive enhanced rights in comparison to ordinary shareholders + these are set out in the company’s Articles - typically, they have a guaranteed right to a dividend and ordinary shareholders will only receive if there are any profits left after the preferential shareholders have been paid
if preference share is 5% and holder invested £100,000 - company makes enough money for dividends: typically amount of dividend expressed as a percentage of the nomial value of preference share, therefore £5,000
+ in return for enhanced right to dividend, preferential shareholders forego voting rights (not allowed to vote at general meetings)
Whare are cumulative preference shares?
where preference shareholder has to be paid any missed dividends from previous financial years as well as the current financial year’s dividends, as long as there are profits available to pay the dividends
What are the rights of participating preference shareholders?
they have a further right to receive profits/assets - e.g. if the ordinary shareholders receive a dividend over a specified amount, this could give the participating preference shareholder a right to an additional payment
What can a shareholder do if they feel unfairly prejudiced?
apply to the court for an order for a remedy - process can be expensive and time-consuming (also potentially difficult to gather evidence held by company)
*e.g. when diverting opportunities to a competing business in which the majority shareholders hold an interest, awarding excessive pay to directors, excluding a shareholder from management of the company (where when the company was incorporated, shareholders’ negotiations led them to believe that they would participate), removal of auditors by the shareholders on grounds of divergence of opinion on accounting or audit
court applies an objective test - considers whether a hypothetical bystander would believe the act/omission to be unfair + cause harm to the minority shareholder
court may make such order as it thinks fit - usually, order other shareholders to buy the shares of the unfairly prejudiced shareholder OR an order for the company to buy back the unfairly prejudiced shareholder’s shares [other orders: restriction on company altering Articles without the leave of court, order that the unfairly prejudiced shareholder has permission to bring derivative action]
When is a derivative claim brought?
when there has been a wrong done to a company which has arisen from an act or omission of a director
What is the procedure of bringing a derivative claim?
(1) shareholders apply to court for permission to continue claim
(2) court will allow claim to continue if application and evidence disclose a prima facie case for continuing [hurdle 1 immediately after serving claim form] - if not, court may give directions as to evidence to be provided or adjourn proceedings to enable evidence to be obtained
(3) court will list a full hearing to determine the shareholder’s application for permission to continue the claim [hurdle 2]
*permission will be refused where the court is satisfied that a person acting in accordance with s.172 would not seek to continue the claim (i.e. would a person promoting the success of the company continue the claim?), where the cause of action arises from an act/omission that has not yet occurred but which has already been authorised by company, or when act/omission has already occurred and was authorised before it occurred or has been ratified since
(4) court may grant permission to continue or adjourn proceedings and only at this stage will the court give directions for the trial of the issues raised
Who bears the burden of the legal costs in relation to a derivative claim?
applicant shareholder if permission is refused
if permission is granted, company will meet all the legal costs as well as the other party’s legal costs if the claim is unsuccessful
When does a substantial property transation arise?
where a director, in their personal capacity, or someone connected with a director, buys from or sells to the company a non-cash asset of substantial value
*non-cash asset: property or interest in property, other than cash
*substantial: over £100,000 or more than £5,000 and more than 10% of the company’s net asset value
*connected person: member of the director’s family (limited to: spouse, civil partner, child, stepchild, parents, any person who lives in an enduring relationship with director as their partner, any children of a person who lives in an enduring relationship with the director as their parent), company which director or person connected with director owns at least 20% of shares
How is consent to be given in relation to a SPT? + consequences for no consent?
by shareholder ordinary resolution - if not, transaction is voidable and individuals may be ordered to account to the company for any gain they have made and to indemnify the company for any loss/damage resulting from the arrangement/transaction
individual:
(1) any director of the company with whom the company entered into the arrangement
(2) any person with whom the company entered into the arrangement who is connected with a director of the company or its holding company
(3) the director with whom any such person is connected
(4) any other director of the company who authorised the arrangement/transaction entered into in pursuance of such an arrangement
How can a company amend its Articles of Association?
*by special resolution
*copy of special resolution + amended articles must be sent to Registrar no later than 15 days after amendment
*changes take effect immediately (does not depend on filing by Companies House)
How can a company change its name?
*by special resolution
*form NM01, special resolution and small fee to be sent to Companies House
*change is not effectrive until Registrar issues new certificate of incorporation
besides special resolution, name may be changed by methods otherwise provided for in company’s articles - in this case, company must give notice to the Registrar with accompaying statement that the change of name has been made by means provided for in company’s Articles
How can a company change the accounting reference date?
*can be done by directors via board meeting
*form AA01 to be filed
*change is only effective when form received by Companies House
- will make a company’s financial year shorter or longer than 12 months, subject to following requirements:
*may only lengthen financial year to a max of 18 months
*may not lengthen more than once in every 5 years (unless you are aligning dates with a parent company or subsidiary, or you have permission from Companies House)
How can a company change the address of its registered office?
*can be done by directors via board meeting
*form AD01 to Companies House + change takes effect upon notice being registered by the Registrar
How can a company appoint/remove a director?
*by ordinary resolution (and board resolution for appointment)
*AP01/TM01 form to be submitted at Companies House within 14 days from a person becoming or ceasing to be a director (notice should include change and date on which it occurred)
*company must update its register or directors and register of directors’ residential addresses
What meetings/resolutions are required in agreeing a new service contract with one of the company’s directors with a term of over 2 years?
(1) board meeting 1 to approve service contract in draft and call general meeting
(2) general meeting for shareholders to pass ordinary resolution
(3) board meeting 2 to enter into contract and authorise director(s) to execute
Who can be a director in a company?
every company needs at least one director who is a natural person that is 16 years old or older + others can be corporate directors [for board meetings, the company will send a corporate representative to discharge its functions as a director]
What are directors responsible for and how do they exercise their powers?
*subject to company’s articles, directors are responsible for the management of the company’s business
*default position is that powers are exercised by passing board resolutions - however, directors can exercise their powers unanimously without a meeting as long as they indicate to each other that they share a common view on the matter (resolution can be in writing or as informal as a text message from each director indicating their agreement to a resolution or course of action)
*directors may delegate any of their powers as they think fit
Who are executive directors?
those who are appointed to the board of directors and have an employment contract with the company (i.e. service contract which set out the director’s job title, duties, and responsibilities)
Who are non-executive directors?
those who are appointed to the board and registered at Companies House as directors of the company, but they do not have service agreements with the contract - they do not receive a salary
What is the role of the chairman?
they will run the company’s board meetings and have casting vote
*the role of the chair of a publicly traded company is more important as they further act as a figurehead in dealings with shareholders and anyone outside the company
What is de facto director?
a person who acts as a director although they have never been appointed or validly appointed
What is a shadow director?
a person in accordance with whose directions or instructions the directors of the company are accustomed to act, but who has not been formally appointed as a director (they work in the background and do not carry of the normal functions of directors, but have a great deal of influence and control over the directors’ actions in practice)
*it is not necessary for the whole board to act in accordance with a shadow director’s directions - only a governing majority + it is not necessary for the board to act in accordance with their directions in relation to all matters
Can directors send an alternative to board meetings?
not under Model Articles - if company wishes to allow its directors to do so, must add a special article
How are the company’s first director(s) appointed/when do they take office?
they will be named in the statement of proposed officers on Form IN01 + they will take office on the certificate of incorporation being issued
How are subsequent directors appointed?
in accordance with articles - if Model Articles: directors can be appointed by the board or by ordinary resolution of the shareholders
When will an individual automatically cease to be a director under the Model Articles?
*if a bankruptcy order has been made against them
*a doctor gives a written opinion to the company stating that the individual has become physically and mentally incapable of acting as a director and may remain so for more than 3 months
When do directors have actual authority?
when they have consent from the other directors to act in a certain way
*can be express: set out in the director’s service contract or following a discussion between board of directors
*can be implied: director has acted in a certain way in the past and board has not tried to stop the director or told them that they are not authorised to act in that way
When do directors have apparent authority?
where there is no prior consent from company, but company is estopped from denying the director’s authority - requires representation by the company to the third party, by words or conduct, that the director is acting with the company’s authority (generally, where company does not correct the impression that director has apparent authority)
When must shareholder approval be sought in relation to a service contract? Why?
when board is proposing to enter into a service contract with a guaranteed term of more than 2 years: i.e. in relation to a long-term service contract
(more than 2-year term is not guaranteed where, under the service contract, company has the general power to terminate agreement with notice of 2 years or less [if can only be terminated for a specific reason, will need approval])
*need approval by ordinary resolution - when an ordinary resolution is proposed, board must keep a copy of the memorandum setting out the terms of the proposed service contract at the registered office for 15 days prior to the general meeting and at the general meeting itself
*without approval, the guaranteed term element of the service contract will be void (the rest is enforceable) - i.e. service contract would be capable of termination on reasonable notice
approval needed as directors are often highly paid and it may be financially harmful to the company if it were locked into a long-term service contract with a director with no possibility of ending the contract
How can companies with Model Articles and only 2 directors approve service contracts?
*quorum would not be met as director in question will be prevented form counting/voting due to personal interest in the service contract
*will need to change the company’s articles permanently by special resolution to allow directors to vote even when they have a personal interest in the matter or allow them to vote when the subject matter under discussion is their service contract OR shareholders could temporarily suspend the operation of Model Article Rule 14 on conflict of interests by ordinary resolution
What administrative steps must be taken in regards to service contracts?
service contracts (or a memorandum setting out their terms) must be available for inspection by the shareholders at the company’s registered office during their term and until 1 year after termination of the service contract
*shareholders have the right to inspect without charge + see them within 7 days of request
How can a directorship end?
(1) resignation
(2) removal of director by ordinary resolution
What is the procedure for removing a director?
(1) special notice is required for the ordinary resolution: this requires notice to be given to the company at least 28 clear days before the general meeting at which the resolution is proposed
(2) once the company has received the special notice, it must inform the director in question (so they can seek advice and prepare for the general meeting)
(3) where practicable, company must give its shareholders notice of the resolution in the same manner and at the same time as it gives notice of the general meeting - if not, company must give its shareholders notice at least 14 clear days before the general meeting
*if after special notice is given to the company, a general meeting is called for within 28 days, notice is deemed to have been properly given (this prevents the directors from calling a general meeting within the 28 day period and invalidating the general meeting by doing so)
Does terminating a service contract mean that the director will be automatically removed from office? (and vice versa)
no:
(1) service contract can only be terminated in accordance with its terms, unless the director is in repudiatory breach of their service contract and can be summmarily dismissed on that basis
*there would need to be an express term to terminate service contract automatically following removal
(2) directors do not need to be employed to perform their duties as director [therefore no automatic removal following termination of contract]
What are the administrative and notification requirements in relation directors/directors’ details under CA 2006?
*company must keep a reigster of directors, containing required particulars (directors’ DOB and address) - this must be available for inspection without charge by shareholders or by other individuals following payment of a fee at the company’s registered office [criminal offence if register is not kept or not open to inspection]
*company must keep a register of directors’ residential addresses for individual directors - this is not open to inspection
*CH01 and CH02 used to notify a change in particulars for natural persons and corporate directors [filed within 14 days]
*AP01 and AP02 used to notify Companies House of appointment [filed within 14 days]
*TM01 used to notify Companies House of resignation/removal [filed within 14 days]
Who does the director owe its duties to?
the company [NOT shareholders or creditors!]
What is the duty under section 171 CA 2006? Remedies?
act within powers
*duty to act in accordance with the company’s constitution and only exercise powers for the purposes for which they are conferred (i.e. to promote the success of the company)
remedies: civil - account of profits, equitable compensation for loss suffered by the company, rescission of any contract entered into, injunction to prevent further breaches/a continuing breach, restoration of property transferred as a result of breach
What is the duty under section 172 CA 2006? Remedies?
duty to promote the success of the company
*director must act in the way he considers, in good faith, would be most likely to promote the success of the company (generally accepted that success equates to increase in share value) for the benefits of its members as a whole
*this is a subjective test (making it v difficult to establish breach)
*non-exhaustive list of factors directors must have regard for:
*(1) likely consequences of any decision in the long term
*(2) interests of the company’s employees
*(3) need to foster the company’s business relationships with suppliers, customers, and others
*(4) impact of the company’s operations on the community and the environment
*(5) desirability of the company to maintain a reputation for high standards of business conduct
*(6) need to act fairly as between members of the company
remedies: civil - account of profits, equitable compensation for loss suffered by the company, rescission of any contract entered into, injunction to prevent further breaches/a continuing breach, restoration of property transferred as a result of breach
What is the duty under section 173 CA 2006? Remedies?
duty to excercise independent judgment
*this duty does not prevent directors relying on advice, as long as the directors exercise their own judgment in deciding whether or not to follow the advice
*not infringed by director acting in accordance with an agreement duly entered into by the company that restricts future exercise of discretion by its directors or in a way authorised by the company’s constitution
remedies: civil - account of profits, equitable compensation for loss suffered by the company, rescission of any contract entered into, injunction to prevent further breaches/a continuing breach, restoration of property transferred as a result of breach
What is the duty under section 174 CA 2006? Remedies?
duty to exercise reasonable care, skill and diligence
two-stage test: compare director’s conduct to the care, skill, and diligence that would be exercised by a reasonably diligent person with
(a) the general knowledge, skill, and experience that may be expected of a person carrying out the functions carried out by the director in relation to the company (minimum standard)
(b) the general knowledge, skills, and experience that the director has (higher standard where directors’ actual knowledge/skill/expertise is greater than (a))
remedies: common law damages assessed in the same way as damages for negligence
What is the duty under section 175 CA 2006? Remedies?
duty to avoid conflicts of interest
*applies to the exploitation of any property, information, or opportunity + it is immaterial whether the company could take advantage of the property, information, or opportunity/declined to do so
*this section is concerned with a contract in which the company is NOT involved
remedies: civil - account of profits, equitable compensation for loss suffered by the company, rescission of any contract entered into, injunction to prevent further breaches/a continuing breach, restoration of property transferred as a result of breach
What is the duty under section 176 CA 2006? Remedies?
duty not to accept benefits from a third party
*cannot accept benefits conferred by reason of them being a director or doing/not doing anything as director
*there is no breach if the acceptance of the benefit cannot reasonably be regarded as likely to give rise to a conflict of interest [i.e. director feels so beholden to the third party that they would act against the best interests of the company] - therefore usually requires something lavish (not merely corporate hospitality)
remedies: civil - account of profits, equitable compensation for loss suffered by the company, rescission of any contract entered into, injunction to prevent further breaches/a continuing breach, restoration of property transferred as a result of breach
What is the duty under section 177 CA 2006? Remedies?
duty to declare interest in a proposed transaction/arrangement
*declaration must be made BEFORE the company enters into the transaction or arrangement in question
*no prescribed way for declaration to be made
duty to declare does NOT arise where:
*(a) director is not aware of the interest, or of the transaction or arrangement in question [director is treated as being aware of matters of which he ought reasonably to be aware]
*(b) interest cannot reasonably be regarded as likely to give rise to a conflict of interest
*(c) other directors are already aware of conflict of interest (or ought reasonably to be aware of it)
*(d) it concerns the terms of the director’s service contract
remedies: civil - account of profits, equitable compensation for loss suffered by the company, rescission of any contract entered into, injunction to prevent further breaches/a continuing breach, restoration of property transferred as a result of breach
What is the duty under section 182 CA 2006? Remedies?
duty to declare interest in an existing transaction/arrangement
*must declare nature and extent of interest + declaration to be made as soon as is reasonably practicable
*section does not apply if/to the extent that the director has already declared interest under s.177 (proposed transaction/arrangement)
*declaration must be made: (1) at a meeting of the directors, (2) by notice in writing sent to all the other directors [by hand or post / where the recipient has agreed to receive by electronic means, by agreed electonic means], or (3) by general notice of the interest given at a board meeting (or the director takes reasonsable steps to secure that notice is brought up and read at the next meeting after it is given)
duty to declare does NOT arise where:
*(a) director is not aware of the interest, or of the transaction of arrangement in question (they are treated as being aware of matters of which he ought reasonably to be aware)
*(b) interest cannot reasonably be regarded as likely to give rise to a conflict of interest
*(c) other directors are already aware or ought reasonably to be aware
*(d) it concerns the terms of the director’s service contract
remedies: criminal offence, therefore punishable by fine
How can a shareholder ratify a breach or potential breach of a director’s duty?
by ordinary resolution
*for written resolution: if director in question is also a shareholder, they will not be an eligible member (i.e. will not receive the written notice)
*for general meeting: if director in question is also a shareholder, their votes at the general meeting (and the votes of any shareholder connected with them) will be disregarded
*ratification means director will escape liability to the company
What are wrongful trading claims?
*brought by liquidator or administrator
(1) company has gone into insolvent liquidation or insolvent administration
(2) before the commencement of the winding up of the company, directors knew or ought to have concluded that there was no reasonable prospect that the company would avoid going into insolvent liquidation or administration, and
(3) [defence] having concluded so, the director failed to take every step with a view to minimising the potential loss to the company’s creditors as they ought to have taken [reasonably diligent person standard]
*court may order a director to contribute to the company’s assets in order to increase the amount of money available to pay creditors (as the court thinks proper)
to ascertain (3): steps to be taken include seeking professional advice from solicitors/accountants, limit spending, check company’s accounts regularly, keep records of their own actions
What are fraudulent trading claims?
*brought by liquidator or administrator
if in the course of the company being wound up, it apepars that the company’s business has been carried on with intent to defraud creditors of the company or creditors of any other person, for any fraudulent purpose
[provind intent to defraud is difficult]
*court may declare that any persons who were knowingly parties to the carrying on of business are liable to make such contributions to the company’s assets as the court thinks proper
*any director liable for fraudulent trading also risks a criminal conviction
What are misfeasance claims?
*during the course of the winding up of the company, directors may be ordered to contribute to the company’s assets by way of compensation in respect of breaches of any fiduciary or other duty
What is the procedure for making a loan to a director of a company or of its holding company?
shareholder approval needed - ordinary resolution
*if general meeting: memorandum setting out the terms of the loan and the company’s liability must be made available for inspection at the company’s registered office for 15 days prior to the general meeting at which the ordinary resolution will be proposed and at the general meeting itself
*if written resolution: a copy of the memorandum must be sent out with the written resolution (does not need to be available for inspection at the company’s registered office)
if approval is not given, transaction/arrangement is voidable at the instance of the company + the director whom the company entered into the transaction and any director who authorised the transaction/arrangement are liable to account to the company for any gain they have made, and are jointly and severally liable to indemnify the company for any loss or damage
*transaction can be affirmed within a reasonable time by the company by passing an ordinary resolution + it will no longer be voidable and directors will not be liable in relation to their initial failure to seek shareholder approval
What are the exceptions to the requirement for an ordinary resolution in relation to a loan made to a director?
*expenditure on company business - i.e. for the purposes of the company or for the purposes of enabling the director to properly perform their duties (e.g. for a car to travel to customers around the country as a sales director) (not exceeding £50,000)
*expenditure defending criminal or civil proceedings in connection with any alleged negligence, breach of trust/duty, default by him/her in relation to the company or an associated company
*expenditure defending regulatory proceedings or himself/herself in an investigation by a regulatory authority
*minor transactions (not exceeding £10,000)
What is the procedure for making payment for loss of office?
*any payments of £200 or more can only be paid with the prior agreement of shareholders by ordinary resolution (payments to director; to a person connected with a director; to any person at the direction of, or for the benefit of, a director or a person connected with a director)
*a memorandum containing particulars of the payment for the loss of office must be drawn up made:
*(a) if general meeting: available at the company’s reigstered office for not less than 15 days prior to the general meeting at which the resolution to approve the payment is proposed and at the general meeting itself
*(b) if written resolution: memorandum must be sent to all eligible members with or before written resolution is circulated
*no approval is needed for payments made in good faith to discharge an existing legal obligation - i.e. obligation of the company that was not entered into in connection with, or in consequence of, the event giving rise to the payment for loss of office (e.g. payment under terms of service contract / compensation for unfair or wrongful discrimination or dismissal)
if no approval, money is held by the recipient on trust for the company + any director who authorises the payment is jointly and severally liable to indemnify the company that made the payment for any loss resulting from it
What are the consequences for director’s failure to maintain company records?
*punishable by fine
*if records in question are account records, director in default can be imprisoned for up to 2 years
What are the consequences for director’s failure to file certain documents at Companies House - e.g. special resolution within 15 days of it being passed?
punishable by fine
What are the consequences for false or misleading statements in directors’ report, directors’ remuneration report, or a summary financial statement so far as it is derived from the directors’ remuneration report?
director may be liable if he knew the statement to be untrue or misleading or was reckless as to whether it was untrue or misleading, or knew the omission to be dishonest concealment of a material fact
