BLP - Week 2 Company formation, procedure, decision making Flashcards
What is the main law governing company law?
The Companies Act 2006 (CA 2006), which came into effect on 1 October 2009.
What were the two constitutional documents under CA 1985?
The Articles of Association and the Memorandum.
What happened to the memorandum under CA 2006?
It is no longer part of the company’s constitution; it is now only a formality for registering a company.
What is the purpose of the Articles of Association?
It regulates relationships between shareholders, directors, and the company, covering directors’ powers, meetings, shareholder rights, and share transfers.
How can a company amend its Articles?
By passing a special resolution (at least 75% approval) in good faith.
Good faith in the interests of the company as a whole.
What is the legal effect of the Articles?
They form a binding contract between the company and its members.
What are the two ways to incorporate a company?
(1) Incorporate from scratch, or (2) Purchase and modify a shelf company.
What documents must be submitted to Companies House for incorporation from scratch?
- Memorandum
- Articles of Association (if not using Model Articles)
- Form IN01 (including company name, registered office address, type of company (limited by shares or capital), share capital, directors, and PSC details)
- Required fee
What is the purpose of a Certificate of Incorporation?
- The company becomes a legal entity on the date the certificate is issued.
- It confirms the company’s legal existence, name, registered number, and incorporation date.
What are the steps for incorporation by converting a shelf company?
- Name: Change via a special resolution or by other means in the company’s Articles (eg board resolution). Form NM01 must be filed at CH with the special resolution passed.
- Registered Office: Need to satisfy the appropriate address requirement. Change the office address using Form AD01.
- Articles: The company may adopt different Articles by special resolution. Amended Articles and special resolution must be filed with Companies House.
- Members, Directors, and Secretary:
- Shares transferred to the client. Client becomes shareholder once it is entered on the register of members using a stock transfer form
- The client’s directors and company secretaries are appointed by filing the AP01 (directors) and AP03 (company secretary) at CH.
- The shelf company directors and company secretary resign. Forms TM01 (directors) and TM02 (company secretary) are required to be filed at Companies House.
The order of appointment and registration is v important bc the company needs at least one director if it has unamended MA.
What post-incorporation steps should be taken?
- Decide on chairperson and casting vote
- Set accounting reference date
- Register for corporation tax, VAT, PAYE
- Consider a shareholders’ agreement
What is the liability for pre-incorporation contracts?
Under s 51 CA 2006, the person acting on behalf of the company is personally liable unless agreed otherwise.
A company cannot ratify pre-incorporation contracts after its formation.
Who primarily makes company decisions?
The board of directors (for day-to-day matters) and shareholders (for key decisions requiring approval).
What are the types of resolutions for board decisions?
- Board Resolution: Passed by simple majority at a board meeting.
- Written Resolution: If all directors agree, written resolution can be passed without a meeting.
Who can call board meeting?
Any director can call a board meeting by giving reasonable notice to every other director.
What are the types of shareholder resolutions?
- Ordinary Resolution: Passed by a simple majority (>50%).
- Special Resolution: Requires at least 75% approval.
How are votes counted in general meetings (GM)?
- Show of Hands: One vote per shareholder (GM only).
- Poll Vote: One vote per share (can be demanded under CA 2006 rules).
What is required to demand a poll meeting according to the MA?
- A poll can be demanded before or after a show of hands at the GM.
- A poll can be demanded by the chairperson, the directors, two or more shareholders, or anyone representing at least 10% of the voting rights.
What is the significance of poll voting?
It ensures voting power is based on shareholding rather than the number of shareholders.
What are the key features of written resolution?
- Only available to private companies.
- Requires simple majority for ordinary resolutions and 75% for special resolutions.
- Every member has one vote per share.
- Cannot be used to remove directors or auditors.
What are the notice requirements for a General Meeting (GM)?
If a notice is posted or emailed, when is it deemed served?
- 14 clear days’ notice for private companies (excluding day of notice and meeting).
- If a notice is posted or emailed, deemed served 48 hours after sending.
What is the quorum for a GM?
- 2 shareholders (CA 2006 default rule).
- 1 shareholder for single-member companies.
Quorum of BM?
MA - minimum of 2 directors to be present.
What is the sequence of meetings for a full-notice GM?
- BM1 - Call GM, approve notice, circulate notice.
- If its for a SR, notice must contain resolution to be passed ; notice must contain sufficient detail of business to be transacted. - GM - Shareholders vote. [GM held at least 14 clear dats from BM1].
- BM2 - Board reviews shareholder decisions.
- PMMs - Post-meeting matters (Companies House filings, updates to records).
When can a GM be called on short notice?
If agreed by a majority of shareholders holding at least 90% of voting shares. This can be increased by 95% in Articles.
What is sequence of short notice GM?
BM: approve notice, circulate notice
GM: takes place immediately after BM
BM1: informed of shareholder vote and takes relevant actions
PMMs
What is the written resolution procedure for private companies?
- BM - Propose WR, approve wording, circulate to shareholders.
- WR Approval Options:
a. Option 1: Immediate approval if shareholders are present.
b. Option 2: Circulated to shareholders (28-day limit for approval). - BM Reconvened - Board reviews WR outcome, instructs post-meeting actions.
What post-meeting matters must be completed?
- Internal: Minutes must be kept for 10 years, update statutory books (PSC register, register of members, register of directors).
- Companies House Filings:
a. Special resolutions must be filed.
b. Certain ordinary resolutions (e.g., authority to allot shares) must also be filed.
c. Any amendment to Articles must be filed. - Record Keeping: Documents must be stored at the registered office.
