BLP Flashcards
What power does a liquidator have in relation to an onerous lease?
A liquidator can disclaim onerous leases. This releases the company from future obligations under the lease. The liquidator has no power to void a lease.
Order of priority of creditors for a bankrupt individual
- Secured Creditors
- Trustee fees and expenses
- Preferential Creditors
- Unsecured Creditors
- Debts to spouse
Applicability of CA 2006 to name of sole trader
Business name must comply with requirements in CA 2006.
* Must display real name on business letters and invoices
* Must observe restrictions on sensitive words and expressions
What is contained in the Statement of Capital
Number of shares
Nominal Value
Class of Shares
Rights attached to shares
How are partners taxed on CGT?
Individually. Share is calculated by:
1. Respective shares in asset (asset surplus ration in PA); if none
2. Parntership-profit sharing ratio
Documents to submit to CH on incorporation
- IN01
- Memo
- Incorporation Fee
- Articles (if not using model articles)
IN01 contains all the other info like statement of capital, proposed officer, PSC, statement of compliance, email, registered office etc.
Use of capital losses to offset trading profits and chargeable gains
Capital losses can only be set off against chargeable gains (not trading profits).
They can only be set off against current year and future year (cannot be carried back)
NOTE: trading losses can be deducted against TTP (capital and income profits)
Effect of a loan being written off for a close company
- Tax paid by Co is refunded
- SH deemed to receive a dividend to amount of loan written off
Financial year for CT
1 April - 31 March
When must a company register for VAT
At month end if taxable supplies in the past year exceed £90,000
Tax payable on Zero rated supplies
Food/sewerage and water/book/new houses/public transport/kid clothes
HMRC refunds input tax (e.g. if paid £30k input tax but charged no output tax, get it back)
Authorisation of allotment of non-participating 5% preference shares
- Authority to Allot - OR
- Approval of rights attached to shares - OR
No pre-emption rights as non-participating 5% preference shares so have fixed income rights
VAT for separate businesses owned by same person, partnership or company
person/ partnership: 1 VAT registration for all separate businesses
Company: separaate VAT registrations if organised into several divisions
Value of business property when calculating IHT and and BPR?
Value at time of transfer (not value at date of death)
Taper of RNRB
If taxable estate exceeds £2m, RNRB is reduced by £1 for every £2 over the top.
Procedure for share buy-back from distributable profits
- SH OR approving sharebuyback contract
- circulate contract 15 days before GM (or with written resolution)
If passed:
* Keep contract for 10 years
* update balance sheet (create capital redemption reserve)
* Update register of members and PSC
* File at CH (within 28 days): SH03, Notice of Cancellation, Statement of Capital
Resolutions and filing for allotment of shares
- Cap = OR if pre Oct 2009
- Authority to Allot = no OR if priv + same class + 1 class already
- Pre-emption rights = SR if ordinary share + not double capped
- Amend articles = SR if new class of share
- BR
CH
- within 15 days: SRs, ORs, Articles
- within 1 month; SH01 (Statement of capital)
PSC / Register of member updates
Who can appoint an administrator and how
Out of court (NoI (wait 5 Bdays) NOA (within 10 Bdays)
- QFCH
- Company
- DIrectors
Court permission (notify QFCH + apply to court)
- Any creditor
- All of the above
- CVA Supervisor / Liquidator
Rollover relief when replacement asset is worth less than proceeds of sale
- Amount by which the sale price of original asset exceed cost of replacement asset becomes chargeable immediately
- Only the remainder reduces acquisition cost of replacement asset
e.g. if sale price = 200k and repalcement = 180k (20k becomes chargeable immediately and only remainder of chargeable gain can be deducted from 180k)
Can D vote or count in quorum at board meeting in relation to fixed term service contract?
No
Regulatory requirements as to members and officers for plc
1 Member
2 Directors
1 Company Secretary
Share capital requirements for plc
nominal value of alloted share capital must be at least £50k
SH must pay at least 25% of nominal value and whole of any premium
What must Ds do if plc net assets are 50% or less of its called up share capital?
Convene a GM to consider the problem (Ds do not have to take any definite steps to remedy the problem)
When can plc pay a dividend?
Net assets are greater than value of called up share capital and undistributable reserves.
If net assets are less than SC and UDR (or would become less after dividend is paid) cannot pay dividend.
Dividend Procedure
- Recommended by Board
- Declared by SHs (same or less)
Right to demand Poll vote
one or more holding at least 10% voting rights
2 or more with right to vote
chairman
Directors
Effect of acting outside objects clause (ultra vires beyond powers in constitution)
Validity of agreement cannot be challegnged
Civil consequences for Ds under s171
Model articles and payment of shares on issue
All shares must be fully paid up on issue
Short notice procedure
Majority in number (over 50%) and those in favour hold 90& or more voting rights (95% if plc)
Can 25% shareholder block SRs?
No - as can still get 75%
Requisition a GM
5% of voting rights
SDLT on shares
Payable by Buyer
Must be worth over £1,000
Amount: 0.5% on whole amount rounded up to nearest £5
NOT if transferred as a gift. Seller will pay CGT on disposal of chargeable gain,
Effect of buy back on balance sheet if using distributable reserves
Share capital: Reduce by nominal value
Share premium account (no change)
P&L: reduce by entire amount
Capital Redemption Reserve: create and value is nominal value of shares bought back
Net assets: reduce by entire amount
Voting on OR to buy-back shares from distributable reserves
SH who is having shares bought back is excluded from participating. Over 50% remaining shares must vote in favour.
Financial Assistance
- is it potentially unlawful?
- if target is plc: unlawful from plc and all subsidiaries
- if target is ltd: unlawful from plc subsidiaries only - does the amount involvedd reduce net assets to a material extent?
Fixed term service contract length for SH approval
OVER 2 years
Who does a director owe its duties to?
Company itself
Written resolution time period
before end of 28 days beginning on circulation date
Unfair Prejudice Claim
Conduct must be in repsect of company’s affairs
Conduct must be unfair AND prejudicial
Notice requirements for GM
14 clear days (dont count day notice is given adn day of meeting itself)
Deadline to submit accounts for ltd and plc
Ltd: 9 months after end of accounting reference date
plc: 6 months
Forms to changee regisstered office and accounting reference date
Registered office: AD01
Accounting Date: AA01
Parntership default rules on profits, losses and withdrawing capital
Profits = share equally
losses = share equally
withdrawing capital: implied agreement entitled to withdraw original contribution
Note: if partners share profits unequally because of an express or implied agreement, the losses will also be shared unequally unless there is agreement to the contrary
treatment of interest on capital paid in a partnership
interest is NOT a deductible businesss expense (it is a preferential appropraition of profit). It should be paid first to teh partner entitled before the remaining profit is allocated.
How to sue a partnership
- Action against firm itself (partnership name)
- Serve copy on any partner OR any person having control or management of business at the principle place of business
When will a partnership be legally bound to a contract / deed
Contract: binding if entered into in firm’s name by an authorised person (need not be a partner)
Deed: each partner should execute personally (single partner cannot bind partnership to a deed)
ranking of a partner’s private and partnership creditors
partnership creditors rank equally with private creditors for private proprty.
Private creditor can claim partnership property if private property is insufficient. But, they will rank after the partnership creditors’ claims
impact of partner retiring
Automatically dissolves paternship unless agreed otherwise. Retiring partner can call for assets to be realised and creditors paid off.
Triggers for automatic dissolution of partnership
Retiring
Bankruptcy of partner
Novation agreement
On retirement, partner remains liable for existing debts. However, will not be liable for debt to specific creditor if enters novation agreement with creditor and all partners. There must be consideration, new partner or deed for it to be binding.
resolution for winding up
SPECIAL
Prescribed part fund calculation
Start with amount remaining after fixed, preferential paid (e.g. 100k)
minus 50% of first 10k = -5k
minus 20% of remainder (e.g. 90k) = -18k
Amount avaiable for floating charge holders = 100k - 5k - 18k = 77k
Payments made after bankruptcy petition is filed
ALL payments are void unless court approves it
