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stage 1 (Final deck) > Bs prac > Flashcards

Bs prac Flashcards

1
Q

When must a charge be registered?

A

within 21 days of the date of the creation of the charge (registered by the Company or the lender)

The date of creation and NOT registration decides the order of priority

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2
Q

Is it possible to authorise a conflicted director to continue to act?

A

Yes.
By the non-conflicted members of the board (in a board meeting).
Excluding the conflicted director for quorum AND voting.

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3
Q

When does an LLP come into existence?

A

After receiving the certificate of incorporation (like a Co.)

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4
Q

What are statutory pre-emption rights?

A

Under the unamended AOA, existing shareholders should be offered new shares (at the same price as to an outsider) before they are offered to 3rd parties

Given 14 days to accept/reject

(only ordinary SHs have pre-emption rights; not preference SHs)

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5
Q

Which actions require special resolution?

A
  1. Change of name of Co.
  2. Amending the AOA
  3. Changing shareholder’s agreement
  4. Buyback of shares
  5. Winding up the Co
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6
Q

What is the Duomatic principle?

A

a company’s shareholders can informally give approval through unanimous consent, rather than abiding by the strict formalities

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7
Q

What are the Companies House filling requirements for a special or ordinary resolution?

A

needs to be filed at the Companies House within 15 days of the passing of the resolution

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8
Q

Can a dividend be paid in a loss making year?

A

yes. It can be paid from retained profits carried forward from previous years (if the accumulated profs exceed the accumulated loss)

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9
Q

What is the period in which a Cos accounts must be circulated to its members?

A

9 months from the end of the relevant accounting period (which is the deadline for the submission of the accounts to the Registrar of Companies)

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10
Q

Which docs need to be filed for changing the name of the Co?

A

NM01 + relevant special resolution (within 15 days of passing to the Companies House)

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11
Q

What rights does an assignee get to a partnership business?

A

Entitled to the profits as per the assigned share and assets on dissolution.

NOT entitled to participate in the affairs of the partnership (including questioning any decision or seeking access to accounts)

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12
Q

What are the conditions to be included in the PSC register?

A
  1. directly or indirectly holds more than 25% of the shares/voting rights in the company;
  2. holds the right to appoint or remove a majority of the board of directors;
  3. otherwise has the right to exercise, or actually exercises, significant influence or control over the company; or
  4. has the right to exercise, or actually exercises, significant influence or control over the activities of a trust or firm (not being a legal person, such as a partnership), which itself satisfies one or more of the above conditions.
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13
Q

When must a newly incorporated Co file its first annual confirmation statement?

A

within 12 months from the date of incorporation and every 12 months after that

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14
Q

What is the minimum share capital for a public limited company?

A

50,000 + 1/4 of the share capital must be paid up at incorporation

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15
Q

What does the ostensible authority of a company secretary cover?

A

enter into contracts related to the admin affairs of the Co (NOT commercial which requires specific authority)

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16
Q

What is the procedure for removal of a director?

A

An ordinary resolution (simple majority of over 50% votes) at the general meeting [AOA cannot increase this limit; provided by CA 2006]
+
special notice at least 28 days before the general meeting (written resolution not applicable)

[ordinary resolution with special notice]

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17
Q

What types of contracts are voidable by a Co?

A

When a director is a party to the contract as a “connected person” (20% share capital/voting rights). Any contracts related to a connected director will be voidable (but enforceable). Unless the Co affirms it, is indemnified against it, restitution is not possible and 3rd party has acquired bona fide rights w/o notice of the Director’s exceeding their power

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18
Q

What is the process of ratification of Director’s conduct?

A

Member’s resolution
1. Written resolution: where directors or connected members are NOT eligible to vote
2. Meeting: where votes do not include director’s or connected members’ votes (but they can attend. make quorum and take part in other business)

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19
Q

What are the required qualifications of a CS for a public Co?

A

CS to have requisite knowledge and experience, which includes:
1. CS at public Co for 3-5 years )immediately preceding the appointment)
2. member of chartered institutions
3. barrister/advocate/solicitor in the UK
4. person capable of discharging CS duties because of experience or previous position

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20
Q

What are the record keeping requirements related to secretaries in a Co?

A
  1. register of secretaries (change must be notified to the Registrar)
  2. with particulars of the secretaries
  3. available for inspection (change of location must be notified to the Registrar)

Criminal offence to not follow above

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21
Q

What are the liabilities of partners?

A

Joint liab for contractual obligations

Joint + several liab for tortious obligations

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22
Q

What kind of provisions are void w.r.t members right to vote?

A

Any provisions not allowing 5 or more/members with not less than 10% voting rights to demand a poll

Generally members have 1 vote for each share they hold for a written resolution/1 vote on a show of hands (irrespective of number of shares held)

For polls, every member has 1 vote for each share they hold

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23
Q

When can a floating charge be set aside?

A

If no consideration is provided for the charge up to 12 months before the onset of insolvency

OR

up to 2 years if the floating charger holder is connected to the Co (such as Director)

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24
Q

What is a confirmation statement?

A

A confirmation statement (CS01) is a snapshot of general information about a company’s directors, secretary (where one has been appointed), registered office address, shareholders, share capital and people with significant control.

It is a confirmation that a Co has notified the Companies House of all relevant changes.

It is to be filed within 14 days of the last review period (or 12 months after incorporation)

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25
Q

Which conducts of a director can be ratified by an ordinary resolution?

A

negligence, default, breach of duty/trust

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26
Q

What details does a Co’s register of Members is required to include?

A

Name and address of each member, the date on which they were first registered as a member and the date on which a person ceased to be a member

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27
Q

Who can call a general meeting of a private Co?

A

Directors (at any time)

Members (with more than 5% of the paid up share capital or at failure of Directors to call a meeting; Shs who have at least 50% voting rights)

Resigning auditor (to give reasons) and Court can also call a meeting

Meeting is called within 21 days of the deposit of requisition and held within 28 days after the date of the notice convening the meeting

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28
Q

What kind of resolutions are required to be filed at the Cos House?

A

ONLY special resolutions

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29
Q

What penalties do conflicted directors face?

A

Civil and criminal penalties + risk of disqualification

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30
Q

How long should a Co keep a copy of a retired director’s service contract?

A

1 year after it has expired

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31
Q

How should decisions taken by Directors be recorded?

A

As minutes of Board meetings in the Co’s minute book (must be retailed for at least 10 years)

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32
Q

Can a partner be expelled from a partnership?

A

No. Unless an express power to do so has been included in the partnership agreement

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33
Q

What kind of indemnity cannot be provided to a Director?

A

Any indemnity against negligence, default, breach of duty/trust

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34
Q

Can a private Co be incorporated with a corporate director?

A

No. A private Co needs at least 1 natural director (private Cos need only 1 Director)

[A public Co needs at least 2 directors (1 of which can be a corporate director)]

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35
Q

what is a dividend in specie?

A

refers to distribution to shareholders in a form other than cash

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36
Q

What kind of asset transfer requires shareholder approval?

A

A transfer connected to a Director (20% share capital/voting more)
+
substantial asset (more than 10% of the Co’s asset value and is more than 5,000) OR
exceeds 100,000

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37
Q

Can a procedure under the CA 2006 be derogated from?

A

Yes, if the AOA provides for an easier provision for removal of a Director

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38
Q

What are small LLP thresholds?

A

small LLP must meet at least 2 of the following conditions:

  1. annual turnover must be not more than £10.2 million
  2. the balance sheet total must be not more than £5.1 million
  3. the average number of employees must be not more than 50

[small LLPs are exempt from auditing]
[any LLP beyond this needs to be audited]

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39
Q

Does an interim dividend require an ordinary resolution?

A

No

[general dividend (non interim) requires an ordinary resolution]

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40
Q

Which docs need to be filed after share allotment?

A

Must file the ordinary resolution (approving the allotment) within 15 days
+
return of allotment nd statement of capital within 1 month
[allotment registered in the internal register of members within 2 months]

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41
Q

What docs need to be filed by a public Co after its accounting reference date?

A

Accounts (P&L A/C and B/S)
+
Director’s and strategic report

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42
Q

What is re-registration of a Co?

A

You can re-register your company to change its legal status from: a private company to a public company OR a public company to a private company limited by shares

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43
Q

Can liab to creditors be tranferred?

A

Yes (through novation) but only with the CONSENT of the creditors

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44
Q

What steps are required to declare an interim dividend?

A

Board resolution of the Directors (NOT ordinary resolution of the members; as it only required for a FINAL dividend)

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45
Q

What records is an LLP required to maintain?

A

registers with details of members, registered addresses of members, register of PSC, register of debenture holders (if issued)

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46
Q

How many designated members are required for an LLP?

A

2 designated members (if no design member or only 1, then ALL members become designated members)

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47
Q

How is EPS calculated?

A

company’s profit divided by the number of shares

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48
Q

What filings are required by a small Co?

A

only need to file abbreviated accounts to Registrar; also exempt from filing a strategic report but needs to file a director’s report to the shareholders

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49
Q

Can statutory pre-emption rights be overridden?

A

Yes. By the AOA
OR
Special resolution by the members disapplying the pre emptions rights (separate from ordinary resolution passed for allotment of shares)

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50
Q

Can shareholders make changes to declared dividend?

A

Yes. Any dividend can be approved, reduced or rejected by ordinary/written resolution by the shareholders.

[dividend CANNOT be INCREASED by the shareholders]

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51
Q

How many members complete a quorum for a general meeting?

A

Min 2 members (as per AOA; NOT majority members)

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52
Q

What is the notice period required for calling a general meeting?

A

14 clear days (excluding notice and meeting day)
Includes weekends and public hols

53
Q

What kind of records is a Co required to keep?

A
  1. Register of members
  2. Register directors
  3. Register of persons with significant control
  4. Register of Secretaries
  5. Register of charges against its assets
54
Q

How can a Director be appointed in a Co with Model Articles?

A

In a company which has the Model Articles, a director can be appointed by either the board or by an ordinary resolution of the members.

Service contracts are awarded by the board; however, if the term of a service contract is longer than two years, it must first be approved by ordinary resolution of the members.

55
Q

What is the notice period they are required to give the shareholders for calling an Annual General Meeting?

A

21 days

56
Q

What kind of shares are subject to statutory pre emption?

A

Shares ONLY for cash
(shares are offered to the existing SHs for the proportion in which they own the shares)

57
Q

In which order will any available funds be distributed to creditors of a sole trader?

A

1) costs of the bankruptcy;
(2) preferential debts (holiday pay due to employees, wages of employees due in the last four months, and HMRC in respect of VAT, PAYE, and National Insurance contributions owed);
(3) ordinary unsecured creditors;
(4) postponed creditors (spouse or civil partner)

58
Q

Which creditors would be able to apply for the company to be wound up?

A

A creditor must be able to prove the company is insolvent to be able to issue a winding up petition.

A creditor can prove insolvency by either:

serving a statutory demand which is not paid within 21 days in respect of a debt of £750 or more,

OR

by obtaining a judgment and attempting to execute the judgment but the debt is not fully satisfied

59
Q

Who can apply for individual bankruptcy?

A
  1. One or more unsecured creditors who is/are owed at least £5,000 combined
  2. Supervisor of an IVA
  3. Debtor themselves

a secured creditor cannot apply for a bankruptcy order

60
Q

What happens if a charge is not registered against a Co?

A

A charge which has not been validly registered at Companies House is void against other creditors (it is VALID against the lender)

Although fixed charges take priority over floating charges, that is true only if the fixed charge has been registered with Companies House

61
Q

What effect will the death of the partner have on the partnership?

A

The death of a partner will automatically bring the partnership to an end unless the partnership agreement contains provisions to the contrary

62
Q

How is an LLP taxed?

A

an LLP is not a taxable person even though it is recognised in law as having a separate legal personality, and therefore does not pay corporation tax

Members of an LLP are taxed individually for income tax instead

63
Q

What is express actual authority given to a partner?

A

express actual authority is the authority the partners expressly agree a partner has. Such authority can be granted in the partnership agreement or by any other agreement of the partners

a partner does not have express actual authority to act on behalf of the partnership simply by virtue of being a partner (although a partner may have implied actual authority or apparent authority to carry on business apparently within the scope of partnership business by virtue of being a partner)

64
Q

What partnership decisions require unanimous consent?

A

there are a few decisions that require unanimity (again, unless the partnership agreement provides otherwise). These are:
the introduction of a new partner,
a change in the nature of the partnership business,
an alteration to the partnership agreement,
or the expulsion of a partner.

65
Q

What combination of partners must their limited partnership have?

A

A limited partnership is required to have at least one general partner and at least one limited partner

A general partner has unlimited personal liability for partnership debts and is responsible for managing the partnership.
A limited partner is not liable beyond their capital contribution and is not permitted to be involved in the management of the partnership.

66
Q

Who all must be given notice of a general meeting?

A

WRITTEN (not oral) notice

All shareholders (including PR of deceased member and trustee for insolvent SHs)
All directors
Co’s auditor

67
Q

What are the time limits for delivery of notices of general meetings?

A

By hand: notice day + 15 days

By post/email: notice day + 17 days

68
Q

Which members can demand voting by poll in a general meeting?

A

5 or more shareholders
A SH with not less than 10% of voting rights
SH with more than 10% paid up capital

69
Q

Can PRs and trustee vote in general meetings?

A

Only after they had applied to be entered on register of members

(otherwise votes are disregarded)

70
Q

What is the time limit for voting through a written resolution?

A

28 days (NOT clear days)

It lapses after 28 days

71
Q

What are the pre conditions for an IVA to be valid for unsecured creditors?

A

At least 50% of the creditors MUST agree
+ (AND)
these creditors must have 75% of the value of the debt

72
Q

What are the ways to apply for a bankruptcy?

A
  1. By debtor (online application)
  2. Unsecured creditor(s) owed at least 5K
  3. Supervisor of IVA (if IVA breached)
73
Q

What is the difference b/w an administrator and a receiver?

A

An administrator focuses on ALL the creditors and the co.

A receiver only focuses on individual/ particular secured creditors

74
Q

Can a statutory notice period for calling a general meeting be shortened?

A

Yes

but a majority in the number of shareholders who hold at least 90% of the shares must agree to the short notice.

75
Q

The board of directors of a public limited company wish to call an annual general meeting of the shareholders. One of the items on the agenda will be a special resolution to alter the articles of association of the company.

What is the notice period they are required to give the shareholders?

A

21 days

76
Q

When does a member of an LLP have personal liability?

A

Personal liab for a member who is a part of an LLP that has operated as an LLP for more than 6 months without a designated member

77
Q

Who can apply to declare a sole trader bankrupt?

A

One or more unsecured creditors who is/are owed at least £5,000 combined can present a petition for an order of bankruptcy

Note also that a secured creditor cannot apply for a bankruptcy order without giving up their security

78
Q

What is the relevant time for a preference given to a creditor when considering transactions for bankruptcy?

A

within six months of the onset of insolvency
OR
two years if the preference was made to a connected person

79
Q

A company has just appointed a new non-executive director by ordinary resolution of the members.

What internal records must be updated at the Registered Office in respect of the director’s appointment?

A

The register of directors and register of directors’ residential addresses

(non executive director does not have a service contract which would be filed for an executive director)

80
Q

A private limited company was incorporated on 1st June three years ago with the Companies (Model Articles) Regulations 2008 (‘the Model Articles’) as its articles of association. The company’s accounting reference date is changed to 31st December. The company is classed as a small company.

What is the latest date it can file its annual accounts?

A

30 september

A private company should file its accounts no later than nine months after the relevant accounting reference period

(goes from exact date to date and not end of month + applies to both public and private Co)

81
Q

How is profit allocated on dissolution of a partnership?

A

FIRST the capital invested by the partners is paid back

then profits are distributed equally (default) or as per partnership agreement

82
Q

What is the minimum nominal share capital required for a company to be able to register as a public limited company?

A

£50,000 but only £12,500 must be paid up

83
Q

A woman suffers injuries when she is struck by a car whilst crossing a street. The woman’s solicitors write to the driver’s insurers, indicating that the woman is intending to bring a claim. The solicitors subsequently send a letter of claim to the driver, with a copy to his insurers, stating that they will commence formal legal proceedings unless they receive a formal admission of liability within 21 days.

The driver’s insurers respond 10 days later. Their response states that they are investigating the claim and will come back to the woman’s solicitors as soon as possible with confirmation of whether liability can be admitted.

How long do the insurers have to investigate the claim?

A

Three months.

Under the Personal Injury Protocol, a claimant must send a letter of claim to the defendant, giving the defendant 21 days to respond.

If the defendant responds to the letter within 21 days, the claimant must then give the defendant three months to investigate the claim. (If the defendant does not respond within 21 days, the claimant may then start proceedings.)

84
Q

How is the location of a claim decided by the Court?

A

Following receipt of a defence or admission, the court will normally transfer a claim to the hearing centre local to the defendant’s home address (if the defendant is an individual) or the claimant’s preferred hearing centre (if the defendant is a company)

transfer only takes place after receipt of a defence or admission

85
Q

A private limited company was incorporated with the Companies (Model Articles) Regulations 2008 (‘the Model Articles’) as its articles of association. The company has issued new ordinary shares to a new investor in order to raise more capital for expansion.

What must be filed with the Registrar of Companies following the issue of the new shares?

A

A Return of Allotment of Shares form, together with the members’ special resolution disapplying pre-emption rights only.

86
Q

Is shareholder’s approval needed to borrow money?

A

No. Board resolution is enough

(unless AoA provide for it)

87
Q

Does a board have discretion to register a share transfer?

A

Yes

It is open to the board to refuse to register the transfer, as the model articles grant the board absolute discretion to refuse to register the transfer

The board would be limited only by their duty to act in the best interest of the company

88
Q

What must be filed at Companies House in respect of a director’s appointment?

A

The Appointment of Director form within 14 days

89
Q

When do Cos need to file accounts?

A

Private co: 9 months of the accounting reference date (small cos are exempt from audit)

Public co: 6 months of the accounting reference date + audited

90
Q

How can a Co change its name?

A

spl resolution
+
copy of resolution and notice of change to Registrar of Cos

91
Q

What kind of employment contracts for directors need shareholder approval?

A

Employment contracts for directors that are longer than 2 years

92
Q

How long can a director be disqualified for unfitness?

A

2-15 years

93
Q

Can directors allot new shares?

A

Post 2009: yes, IF CO has ONLY 1 class of share + no restrictions in AoA

Pre 2009: seek permission from existing SHs through an ordinary resolution

94
Q

When must charges be registered for a Co?

A

within 21 days of creation

+ certified copy of the charge and fee

95
Q

How long does a Co have to comply with a request for inspection by a shareholder?

A

5 days to comply

Can also apply to Court claiming the purpose is improper

96
Q

What needs to be filed after a change of registered address of Co?

A

Filing of a change of regis add office form at Cos House

[similar form for change of accounting reference date]

97
Q

What needs to be filed at Cos House after appointment of directors?

A

Appointment of Director form within 14 days

98
Q

What needs to be filed at Cos House after removal of directors?

A

Removal of director form within 14 days

99
Q

What steps need to be undertaken after a transfer of shares?

A

Internal filing: update register of members and issue new share certificate within 2 months

100
Q

What steps need to be undertaken after an issue of shares?

A

File a return of allotment of shares form at Cos House within 1 month and any necessary shareholders resolutions within 15 days

101
Q

What needs to be filed at CH after a change in articles?

A

Special resolution and new article within 15 days

102
Q

What needs to be filed at CH after a change in the name of the Co?

A

Special resolution,
+
change your cos name by resolution form
+
fee

103
Q

How long can a court bankruptcy order last?

A

Up to 15 years

(if bankruptcy caused by the dishonesty, negli or recklessness of the debtor)

104
Q

Who initiates voluntary insolvency?

A

Member’s vol reso: directors make statutory reso

Creditor’s vol reso: Directors resolve that Co is insolvent

Members pass a spl reso in both cases

105
Q

What is a transaction at an undervalue?

A

Prop as gift or sold for significantly less than market value

2 years for cos’ insolvency

5 years for indi bankruptcy

106
Q

Are Directors power to allot shares absolute?

A

Yes, if there is only 1 class of shares and no restrictions in AoA

107
Q

A company was incorporated several years ago with the Companies (Model Articles) Regulations 2008 (unamended) for private companies limited by shares as its articles of association. The company has only one class of shares: 1,000 £1 ordinary shares which have been issued to the existing shareholders. The company wishes to disapply any preemption rights and to issue 100 ordinary shares to a new investor.

Which resolutions must be passed before the shares can be allotted?

A

A board resolution to call a general meeting to disapply preemption rights,

a members’ special resolution to give the directors the power to disapply preemption rights,

and a board resolution to issue the shares only.

108
Q

Can a general partnership grant a floating charge over assets as security for a loan?

A

No

only companies and LLPs can grant floating charges

109
Q

Is a partner entitled to be indemnified for payments the partner makes personally on behalf the partnership?

A

Yes, the Partnership Act 1890 requires such indemnity

110
Q

Can a creditor of a partner seek execution on the partner’s share of partnership property to satisfy an individual debt of the partner?

A

No, partnership property is not available to satisfy the individual debt of a partner (unless there is a Court charge)

Same for disposing under a will (cannot)

111
Q

In the absence of agreement what vote is required to admit a new member to an LLP?

A

A unanimous vote of the current members

112
Q

Who may be held liable for the wrongful acts of a member of an LLP committed in the course of the business?

A

Only the LLP and the member who committed the wrongful act.

113
Q

In what circumstances can an LLP not be struck off?

A
  1. traded or carried on business in the last 3 months
  2. changed its name in the last 3 months
  3. subject of an insolvency proceeding
114
Q

A company must ensure that when a director leaves the company, their service agreement remains available for inspection by the shareholders for how long?

A

1 year

115
Q

Does a shareholder have a right to inspect the company’s register of members?

A

Yes, if they have a proper purpose related to their rights as a shareholder, the company has five working days to comply with the request

116
Q

Who may call a shareholders meeting?

A

The directors of their own accord or on demand by shareholders owning shares representing at least 5% of the paid-up voting capital shares

117
Q

What notice is required to hold a shareholders meeting for a company with unamended Model Articles?

A

At least 14 clear days’ notice plus two days for deemed delivery if the notice is not hand delivered

118
Q

What is the minimum amount of time a company may give a shareholder to exercise their preemption right?

A

14 days

119
Q

Under the Companies Act 2006, which registers are private companies required to keep?

A

Register of directors.

Register of members

Register of secretaries

120
Q

How long must minutes of all general shareholders’ meetings must be kept?

A

10 years

121
Q

When does the review period following a company’s first annual confirmation statement begin?

A

The date the company was incorporated

122
Q

What is the minimum level of acceptance of an IVA for it to become binding on all creditors?

A

At least 75% in value of a debtor’s unsecured obligations

+

50% creditors vote in favour of the IVA

123
Q

How may a creditor show that a debtor is insolvent?

A

The creditor makes a statutory demand on the debtor for payment and no action is taken by the debtor within three weeks.

The creditor serves a statutory demand on the debtor for proof of ability to pay a future debt, and the debtor does not show reasonable prospect of being able to pay.

The creditor seeks to execute on a judgment and the attempt fails

124
Q

What percentage of unsecured creditors have to agree before a company can enter into a company voluntary arrangement (CVA) binding on all the company’s unsecured creditors?

A

75%

(with indi its 50% independent creditors and 75% value of unsecured credit)

125
Q

What is the clawback period to determine whether an event was a preference?

A

Six months unless the preferred creditor is a connected person, in which case it is two years

126
Q

How far back can a liquidator, creditor, or court look for transactions at an undervalue?

A

Within 2 years of a company’s insolvency or 5 years of an individual’s bankruptcy

127
Q

What resolutions need to be passed when Directors are issuing a new class of shares?

A

A members’ ordinary resolution to give the directors the power to allot the shares, and a members’ special resolution to change the articles to include the preference share rights

(no need for pre emption rights disapplication as it is a new class of shares

128
Q

When does a trustee in insolvency not have to prove insolvency of an individual for a transaction ta an undervalue?

A

There is no requirement to prove the debtor was insolvent at the time the transaction was made if it was made within two years before the bankruptcy and insolvency is presumed if the transaction is to a close relative

(in other undervalue cases, insolvency needs to be proved)

stage 1 (Final deck) (17 decks)

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