BLP - time limits/voting rules Flashcards
Override obligations under PA or partnership agreement
BLP Partnership
By unanimous consent
Decision making in a partnership
BLP Partnership
Majority needed for “ordinary course of business decisions” & Unanimity needed for “change of nature” decisions)
Voting on introduction & Expulsion of partners
Partnership
Incoming partners (no person may be introduced unless consent of all existing partners)
Expulsion (cannot be expelled by majority unless previously expressed this is possible)
Subject to agreement, how remaining assets are distributed out after debts paid
BLP Partnership
Pay back original capital, then in accordance with PA 1890
How do you incorporate an LLP
BLP Partnership
Two people + form LL IN01 at CH = Certificate of Incorporation
Changes that must be reg at CH for LLP
BLP Partnership
Name, office, membership, charges, annual confirmation statement, accounts
What does a designated member do and minimum required for LLP
BLP Partnership
Signs accounts, files docs at CH, acts for firm on winding up;
Minimum = 2
Date of enforcement for CA 2006
BLP: Formation
1st October 2006
How are BR passed (subject to Articles)
BLP: Formation
simple majority (50%+)
S9 requirements filed to CH for incorporation by scratch
BLP: Formation
Articles (inc memorandum) + Form IN01 + fee = Certificate of Incorporation
How to Alter Articles
BLP: Formation
SR of SH
Changes to make after a shelf company incorporation
BLP: Formation
All SR must be filed; and amended articles along with any forms that CH requires (e.g. change of name form)
* AP01 (appointment of directors)
* AP03 (appointment of secretary)
* TM01 (removal of directors)
* TM02 (resignation of secretary)
* PSC02 and PSC07 (person of significant control (ceasing & entering)
* AD01 Change the registered office form
* NMO1 (change of name)
How to make changes to a shelf corporation (voting)
incorporation
- SPECIAL RESOLUTION = Articles, name
- Share transfer form and share certificate given to new owners & BOARD RESOLUTION = to approve transfer of shares
- BOARD RESOLUTION = Registered Office
- Most other changes can be done by BOARD RESOLUTION
Minimum directors for private/public company
BLP Directors
private = 1
public = 2
Companies that must have a company secretary
BLP Directors
public
apppointment of directors (according to model articles)
BLP Directors
Ordinary Resolution of shareholders or directors decision
Resolution required for a directors service contract
BLP Directors
BR of Ds unless long-term contract (2 years) then SH approval needed by OR
Removal of a director by SH
Directors
OR by SH for removal resolution (special notice 28 clear days)
Removal of director by directors
Directors
not unless articles allow
How a director declares an interest in a proposed transaction
Directors
At a board meeting or in writing before
How a director with an ‘interest’ in a proposed transaction can be allowed to vote (MA)
Directors
Disapply the articles by OR
Transactions w/ directors needs a memorandum circulated
Directors
15 days before vote
Substantial property transactions which require OR by SH (director/connected)
Directors
more than £100,000 or 10% of Net Asset Value of company and over £5,000
Loss of office payments that don’t require SH approval
Directors
In goodwill, damages/settlement, pension, <£200
Loss of office payments to be made available to SH before OR passed
DIrectors
15 clear days
Special notice for removal of director GM
Shareholders
28 clear days (can’t use written resolution)
When must notice be given by board to all SHs if removal res put on agenda
Shareholders
14 clear days
Directors obligations on receipt of s303 request
Shareholders
Given notice of GM within 21 days from s303, and held within 28 days of notice
When SHs can’t use a written resolution
Shareholders
public companies; or the removal of a director/auditor
Minimum quorum for GM
Shareholders
Two SH, unless there is only one
How Shareholders can ratify Directors conduct (e.g. negligence, breach etc)
shareholders
Breach be ratified by OR unlawful acts can never be ratified
(person whose breach is being ratified and person connected to them cannot vote)
How to shorten notice for GM
Shareholders
Can be called by: a majority in numbers of the members AND who, together hold shares with a nominal value of not less than 90% of the total nominal value of the shares - NEED BOTH MAJORITIES
GM is then held immediately following BM
Stages to bring a derivative claim
shareholders
- court approval
- Evidence/views from neutral members
Share of issued shares to vote on varying class rights
Equity finance
In writing 75% of that class or SR at GM of that class
SHs to block a resolution to change class rights
equity finance
apply to court within 21 days & SHs holding 15% of relevant class (who did not vote in favour)
final dividend approval
equity finance
recommended by directors and OR of SH
interim dividend approval
Equity Finance
Directors have authority to distribute if distributable profits (MA 30)
Who private companies can issue shares to
Equity Finance
Targeted investors, employees
Authority for directors to allot if more than one type of share in existence
equity finance
OR by SH / Article provision
How to disapply preemption rights
Equity finance
SR by SH
Period given to SHs to act on pre-emption rights
Equity finance
14 days
Steps after grant of pre-emption rights for allotting
Equity Finance
- Amended Articles/SRs within 15 days
- Register SH01 within one month
- changes of PSC if necessary
- update company registers within 2 months
- issues share certificates within 2 months
what resolution is needed to approve an ‘off-market’ share purchase
Equity Finance
OR by SH
when do the display terms of buyback contract before GM need to be available
equity finance
contract must be available for inspection at the company’s registered office for at least 15 days prior to and at GM
(or circulated if WR 90% of SH agree)
what is needed for approval for buyback from distributable profits or fresh issue of shares
equity finance
SH approve by OR
what is needed for approval for buyback from capital (private only)
equity finance
OR by SH – authorise redemption and contract terms
SR by SH – authorise declaration of solvency and auditors’ report (within 1 week of statement of solvency signed)
Payment out of capital 5-7 weeks after SR
notice of cancellation & statement of capital filed at CH after buyback
equity finance
28 days
How long after buyback must the company have a copy of the buyback contract
equity finance
10 years
how/when to register a charge at CH
Debt Finance
Within 21 days using form MR01 (+ fee + debenture) (+ at LR if land)
when do you have to register loans/personal agreements at CH
debt finance
NEVER !
what is the date used to rank fixed and floating charges
debt finance
date of creation (CH) not including 21 days taken to register
what is the date used to rank land charges
debt finance
date of registration (LR)
what are crytallisation events (for floating charges)
debt finance
insolvency, ceases to trade, receiver appointed
when private companies must file accounts
Accounts
within 9 months of end of accounting period
when public companies must file accounts
ACCOUNTS
within 6 months of end of accounting period
How do SH confirm directors proposed final dividend
accounts
OR
what is the accounting reference period that companies use (subject to change)
accounts
year from end of month of incorporation
What is the personal allowance
income tax
£12,570 (reduced by £1 for every £2 over new income £100,000 and no benefit over £125,140)
what is the personal savings allowance
income tax
basic rate = £1,000 SI at 0%
higher rate = £500 SI at 0%
Additional rate = none
what are the relevant rates for income tax
income tax
BASIC (20%) = £0 - £37,700
HIGHER (40%) = £37,701 - £125,140
ADDITIONAL RATE (45%) = over £125,140
what is the dividend allowance
income tax
£500 tax free allowance
Annual exemption for CGT
CGT
£3,000
How many years can capital losses be carried forward
CGT
Indefinitely
Higher/additional rate for CGT
20%
Basic rate
CGT
10% for unused basic, 20% otherwise
(10% if BPR/IR)
Time restrictions on purchase of new asset for rollover relief
CGT
12 months before / 3 months after sale of old asset
Qualifying assets for BADR (Business Asset Disposal Relief)
CGT
- Assets from a business that used to trade
* Owned for at least 2 years before it ceased to trade;
* Must have been used in the business
* Disposed of within 3 years of ceasing - Shares in a trading company/co that used to trade
* Held for at least 2 years
* Been an officer/employee of the company who holds at least 5% of the ordinary voting shares and is entitled to at least 5% of the profits available for distribution and 5% of the net assets on a winding up for at least 2 years
Lifetime allowance for BADR
CGT
1 million (at 10%)
Lifetime allowance of investor relief
CGT
£10 million
Qualifying IR shares
CGT
- Fully paid for ordinary shares issued after March 2016
- trading co/holding co of trading co
- unlisted at time of issue
- held for 3 years
- Not O/E/of a connected co
Annual Investment Allowance (capital allowance)
Corp Tax
Deduct 100% expenditure up to £1m on YEAR of purchase [normal capital allowance of 18% can be applied to any expenditure above that £1m amount]
In 2023 = companies allowed to deduct 100% of the cost of new and unused plant/machinery (uncapped amount) = full expensing
Calculating income profits
Corp Tax
Income receipts
LESS tax deductible expenditure
LESS capital allowances (AIA + 18%)
LESS trading losses
Calculating chargeable gains
Corp Tax
Sale proceeds
LESS allowable expenditure (nb not maintaining/repairing)
LESS capital/trading losses
Deductible expenditure for income purposes (calculating income profits)
Corp Tax
Wholly and exclusively incurred for the purposes of the trade, not prohib by statute (business entertainment/doubtful debts), be of an income nature (recurring payments)
[NOT dividends]
Capital allowances reduction on Plant & Machinery
Corp Tax
18%
Payment of corp tax TTP £1,500,000 or less
Corp Tax
9 months and 1 day from end of accounting period
Payment of corp tax TTP >£1,500,000
Corp Tax
4 instalments in next 2 years
Time HMRC has to investigate corporation tax underpayment
Corp Tax
6 years
Rates of supply (VAT)
VAT
Standard – 20% (assume most)
Reduced – 5% (smoking cessation products, childrens car seats, domestic heating/power & mobility aids)
Zero-rated – 0% (food, sewerage, water, public transport, books for the blind, books/newspapers, new houses/construction, childrens clothing)
Close company definition
Anti-avoidance tax
5 or fewer participators (SH/cred) or any no of participators who are also directors (control = more than 50% issued share capital or assets on winding up)
Exclusions: listed on SE / wholly owned sub of non-close company
Taxation effect of loan to a participator, for the participator from CC
Tax anti-avoidance
If written off, as a dividend for income tax
If fully repaid, no effect
Taxation effect of loan to a participator, for the company from CC
Anti avoidance - tax
Corporation tax on the loan, paid within 9 months + 1 day of end of acc period
Can claim refund if paid back
CC wont be deemed to have made a loan if …
tax anti-avoidance
Ordinary course of money lending business, form of credit normally given by company, loan to borrower which doesn’t exceed £15,000 in aggregate (borrower works full time for co and no material interest (5%) in CC)
Tests of insolvency
Insolvency
- Cash flow
- balance sheet
- £750 demand for debt
- can’t satisfy enforcement judgement
How long a pre-insolvency moratorium lasts
Insolvency
20 business days, extended by directors further 20 days (extended by max 1 year with creditors/court consent)
Requirements for Pre-Insolvency Moratorium
Insolvency
File at court: statement unlikely to pay debts + ‘monitor’ statement from licenced insolv practitioner that a PIM will rescue the company
Debts exempt from pre-insolvency moratorium
Insolvency
Must pay moratorium debts (but not pre-moratorium debts except rent/supplies/wages/salary/redundancy payments/loans to a bank)
Set up of CVA
Insolvency
- directors draft CVA + appoint nominee
- submit CVA + st of company affairs to nominee
- nominee reports to court within 28 days to decide if creditors/SHs can vote
- creditors have 14 days to vote
- SHs vote in 5 days from cred vote
Requirements for approval of CVA
Insolvency
- Creditors: 75% in value of creditors (excluding secured) + majority in value of unconnected creditors (i.e. NOT related companies/directors) (allow 14 days)
- Members: simple majority within 5 days of creditor vote
Time limit for challenging CVA
insolvency
28 days on unfair prejudice
Creditors bound by CVA
Insolvency
- All unsecured creditors
- Secured/preferential who consented
Creditors bound by Restructuring Plan
Insolvency
All creditors
Approval required for Restructuring Plan
Insolvency
75% each class (cross-class clamp down imposed by non-approving classes if court thinks that they would be better off than liquidation)
When does administration terminate automatically
Administration
after 12 months (unless extended)
Out of court administration procedure
Administration
PROCEDURE: company/directors
* File Notice of Intention & serve QFCH
* Then wait 5 business days
* Not less than 10 business days later from filing NOI, appoint and file notice of appointment
* Administrator appointed
PROCEDURE: QFCH (1st ranking) (streamlined out-of-court procedure)
* Appoint and file notice of appointment
* Administrator appointed
Automatic dissolution after registrar receives notice of complete winding up
Liquidation
3 months
MVL (Members VL) process
Liquidation
- Director’s declaration of solvency
- SR to approve MVL
- OR appoint liquidator, giving notice to any qualifying floating charge holder
Nb only for solvent companies
Order of priority
Liquidation
- Liquidator’s costs inc preserving assets
- Fixed charge creditors – only part of security released from sale of fixed asset
- Preferential creditors (wages etc)
- Prescribed part (set aside for unsecured creditors)
- Floating charge creditors
- Unsecured creditors (only capital paid back) (rank pari passu)
- Interest on unsecured and preferential debts
- SHs
Voidable transactions at undervalue
(criteria)
Voidable transaction
2 years prior to insolvency + insolvent at the time or as a result (presumed with connected person)
Defence of transactions at undervalue
Voidable transactions
Good faith / reasonable belief of benefitting company
Voidable preferences
Voidable transactions
6 months prior to insolvency (unconnected person) / 2 years prior to insolvency (connected person) + co insolvent at the time or as a result + influenced by a desire to prefer creditor (assumed with connected person)
Avoidance of floating charges (ie secure a floating charge to secure an existing charge for no consideration)
Voidable transactions
1 year prior to insolvency (unconnected person) / 2 years (connected person) + company insolvent at the time or as a result of - unless connected person
Transactions defrauding creditors
Voidable transactions
Intention to put assets beyond reach of creditors (no time limit or need to be insolvent)
Typical timeframe of IVA (to repay debts)
Individual insolvency
5 years
Creditors meeting takes place
Individual Insolvency
Within 14 days of court granting interim order
Approval needed at creditors meeting
Individual Insolvency
75% to accept proposals
People who can make a bankruptcy petition to court
Individual insolvency
Unsecured creditor (owed at least £5,000) or supervisor/creditors from failed IVA
Automatic discharge from bankruptcy order
Individual Insolvency
1 year from order if complied with duties
