Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

SQE 1 (Mine) > Business > Flashcards

Business Flashcards

1
Q

When is a company’s accounting reference date?

A

Last day of month of incorp

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What resolution for trading / business name?

A

Board

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What resolution to change account referring date?

A

Board

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Restrictions on change acc referencing date?

A

Cant extend so longer than 18 months . Cannot be extended less than 5 years after the end of an earlier account period that was also extended

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

MA9?

A

Give notice of board meeting - reasonable notice - need not be in writing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Ma 11?

A

Quorum of at least 2 directors at board meeting

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

MA 14

A

D can’t count in quorum if a proposed board decision is:
1 concerned with actual or proposed transaction
2 which direction is I terdt in

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

A 177 CA?

A

Declare nature and extend of interest to board - can’t amend

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

MA 7?

A

Board res passed by simple majority

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

MA 8?

A

Directors can use written resolutions to make decisions. Directors must vote unanimously

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

How to call a general meeting?

A

Board resolution or SH with 5% shares or voting rights can requisition 

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Rules for notice of GM?

A
  1. Send to every SH, director and auditor
  2. Hard copy, electronic, website
  3. Set out date and time, and place
  4. General nature of business
  5. Special res? Exact wording
  6. SH right to appoint proxy
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Minimum notice requirement for GMs?

A

14 CLEAR days - day of GM and day notice deemed received doesn’t count.

If sent by post or email deemed received 48 hours after posted or emailed - so in total would be 18 days

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is quorum of GM subject to articles - s318 CA?

A

2 unless only has 1 SH

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

When do SH votes not count?

A

If voting in following and the vote make the difference of passing:
1. Buy back shares
2. Ordinary res to ratify directors breach where the director is SH

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Who can demand poll vote?

A

1 chair of meeting
2 the directors
3 two or more persons having the right to vote on res
4 10% of total voting rights

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

GM on short notice?

A
  1. Majority SH
  2. Who own 90% or more of voting rights (95% if PLC)
    Consent
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

How to issue a written resolution for a GM?

A

Cannot for PLC’s.

For private:

  1. issue notice via hand out, post or email, or website;
  2. set out originary/special res proposed;
  3. SH sign and return res if vote in favour;
  4. Include lapse date (model articles - 28 days from circulation)
  5. How to signify agreement.

Must be circulated to every eligible member (i/e every SH that can vote).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

s 296 CA 2007 - when are written resolutions passed?

A

When enough people have voted in favour (out of all eligible members)

Vote per share

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

SH request for a company to circulate written res - s292 CA 2006

A

A SG(s) who have 5% or more of the voting rights are entitled to require the company to circulate a written res - articles can reduce this but not increase.

SH can require co to circulate written res with 1000 word statement, Co must circulate in 21 days of SH request and SH must pay co expenses.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Requisitioning a GM

A

SH need 5% of such paid-up capital of co as carries the right of voting at GM. Request needs to state general nature of business.

Directors call in 21 day of request - min period of GM is 14 CLEAR days (board often give more). Max notice period is 28 days (therefore max it can take from request to GM is 7 weeks)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What resolutions must be filed at CH?

A

Special.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What requires a special res?

A
  1. Change name of co
  2. Amend the co’s articles of association
  3. Disapply pre-emptive rights
  4. Approve the re-registration of a private co to a plc
  5. Approve a payment out of capital
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

What documents must be kept at the reg office or SAIL ?

A
  1. Register of members
  2. Register of directors
  3. Register of PSC
    KEEP INDEFINITELY AND UPDATE!

3.Board minutes for every board meeting
4. Minutes for every GM
5. Record of outcome of any written resolution
KEEP FOR 10 YEARS - can keep at central register

Can s

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Who has to file accounts?

A

Directors job - accounts must give “true and fair view of the state of affairs”
- prepare a directors report for a financial year
- small co don’t have to (net assets (total assets - total liabilities) of £5.1mill, turnover (yearly performance sheet) £10.2 mill and no more than 50 employees)
Micro entity don’t have to (balance sheet no more than £316,000, turnover not more than £632,000 and no more than 10 employees)

Director distribute to SHs, debenture holder and anyone who gets notice of GM

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Timing of filing co accounts?

A

9 months from the end of the accounting reference period for private, 6 months from the end of the accounting reference for a public co.

Newly incorp can file the accounts and report 3 months after end of first period

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

When must a company file its confirmation statement?

A

Form CS01 within 14 days from confirmation date (anniversary of incorporation)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Who are the co’s officers?

A

Directors, comp sec and auditor

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Company sec’s usually have apparent authority to enter contracts of admin nature but not trading contracts. True?

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

How to appoint new co sec? When must you notify Reg of Co? What register do you need to keep?

A

Board res. 14 days. Register of secs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Which type of co’s do not need to appoint auditors?

A

Small co and dormant co

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Who appoints the auditor?

A

The directors appoint the first auditor, and the SH appoint after that via ordinary res.

Private co auditor usually reappointed auto

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

How to remove auditor?

A

Ordinary res - SPECIAL NOTICE TO CO FOR PROPOSAL TO REMOVE AUDITOR.

Auditor must deliver a statement to the company explaining the circumstances about why ceasing office. Useful if unethical behaviour in co

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

Who are the first 2 shareholders?

A

People who sign the memo of association as subscribers.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

When must company register transfer (i.e new SH or increased shares)

A

As soon as practicable and, as a long stop, within 2 months of the allotment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

What to do if a company has only one member (SH)

A

Statement to that affect on the ref of members. If kept at reg office or SAIL it must be availible for inspection to SH free of charge and to anyone else for a feww

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

Who has the right to hold a share certificate?

A

SH - issue in 2 months of allotment of shares or within 2 months of a transfer of shares

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

Do you need to keep a PSC register even if there are no SH?

A

Yes - only people with OVER 25% of Co shares need to be on PSC

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

What does a SH membership rights include?

A

Voting rights and right to share in the co’s profits by receiving dividends

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

What is Bushell v Faith cause?

A

Often in SH agreement - give shareholder weighted voting rights when res under consideration to remove that SH from their office as director.

Can’t restrict directors from voting in a particular way because then D’s wouldn’t be acting in the best interest of a company.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

can SH apply to court to hold a GM?

A

Yes, i.e if meeting would be quorate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

Can SH get company wound up.

A

Yes if management is in deadlock and there is no way of resolving (IT IS JUST AND EQUITABE TO DO SO)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

Can SH get an injunction?

A

Yes to prohibit co from doing something prohibited by its constitution

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

When is a company a subsidiary or holding co?

A

Subsid (other co called holding co)
1. other co has a majority of the voting rights;
2. other co is a member of it and has the right to appoint or remove a majority of its board members
3. other co is a member of it and controls alone (via agreement) a majority of the voting rights
4. it is a subsid of a co if that is itself a subsid of that other co

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

Joint SH on reigster of members?

A

If sahres are held jointly, need 2 names on reg of members but only one address

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

What are cumulative/non-cumulative sahres

A
  1. Cumuative = SH has to be paid any missed dividends from previous financial years. This right ranks before payment of dividends to ordinary SH in current FY
  2. Non - SH loses right to that year’s dividend if no paid
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
47
Q

What protections are there for minority SH?

A
  1. unfair prejudice petitions
  2. derivative claims
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
48
Q

What is an unfair prejudice petition ?

A
  • any SH applies to the court for an order for a remedy when they feel have been unfairly prejudiced as a SH. Bring claim on own on behalf. Grounds include:

a. company’s affairs have been conducted in a manner that is unfairly prejudicial to the interest of the members generally, or some part of its members (inc claimant)
b. an actual or proposed act or omission of the co is or would be prejudicial.

(ex - diverting opportunities to competing business in which majority SH holds an interest, award excessive pay to Ds, excluding SH from management where led to valued would be participating, removing audtor due to ‘divergence of opinion’ on accounting/audit procedure)

Most common orders:
1. other SHs must buy back the unfairly prejudiced SH; or
2. co must buy back shares
3. restriction on the co altering its article without leave of court
4. order that C has permission to bring a derivative claim

Test for unfair prejudice? OBJECTIVE ‘hypothetical bystander would believe the act or omission to be unfair’

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
49
Q

What is a derivative claim ?

A

A derivative claim is a claim instigated by a shareholder for a wrong done to a company which has arisen from an act or omission of a director. Brought on behalf of co. The point of a derivative claim is to allow shareholders to instigate legal action instead of the board, because the board is neglecting to bring a claim or is refusing to do so. A derivative claim may only be brought in relation to a cause of action arising from an actual or proposed act or omission involving negligence, default, breach of duty or breach of trust by a director.

  • issue claim but need to apply for permission to continue
  • hearing
  • Court MUST REFUSE PERMISSION TO CONTINUE IF:
  • where the court is satisfied that a person acting in accordance with s 172 CA 2006
    would not seek to continue the claim. In effect, this means that the court will not allow an individual who is not promoting the success of the company to continue the claim. A full explanation of this directors’ duty to promote the company’s success is at 3.16.2;
  • where the cause of action arises from an act or omission that has not yet occurred, but which has already been authorised by the company (see 3.16.5); or
  • when the act or omission has already occurred and was authorised before it occurred or has been ratified by the company (see 3.19) since it occurred
  • Court MUST take INTO ACCOUNT:
  • whether the shareholder is acting in good faith in seeking to continue the claim;
    the importance that someone acting in accordance with s 172 (somebody who is acting in good faith to promote the company’s success) would attach to continuing;
  • whether any past or future action or omission was authorised, or if not, would be likely to be ratified;
  • whether the company has decided not to pursue the claim; and
  • whether the act or omission gives rise to a cause of action that a member could pursue in their own right.
  • In particular, the court is obliged to have particular regard to any evidence showing the views of those shareholders with no personal interest in the matter. This is because these individuals can be seen to be objective.

The legal costs of making an application to continue a derivative claim are met by the
applicant shareholder if permission to continue is refused. If permission to continue is granted, the company will meet all of the legal costs of the claim, as well as the other party’s legal costs if the claim is unsuccessful

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
50
Q

Which type of companies tend to be a limited partner (although not many!)

A

Specialist financial business, e.g investment funds and venture capitals

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
51
Q

When can the corporate veil be pierced (Petrodel Resources v Others 2013)?

A

When individual has existing legal obligation which he has evaded or which he deliberately evades by using a company he controls.

Can only piece the veil to to deprive individual or its controller of the advantage they would have received as a result of tbe company’s separate legal personality

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
52
Q

Requirements for PLC

A
  1. Constitution must said it’s plc
  2. Use plc abbreviation
  3. Allowed Share capital minimum is £50k - atleast 1/4 of all shares need to be paid up on their nominal value, and all premiums paid
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
53
Q

When does an LLP come into existence

A

Date of incorporate on the certificate of incorporation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
54
Q

Who can offer floating charges ?

A

Companies and LLPs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
55
Q

How to set up limited co

A
  1. Send IN01 to Co Ho
  2. Send memo of association (and articles if not using model)
  3. Pay fee
  4. Apply electronically or paper and send to reg of co.
  5. Co Ho will check (1. Correct fee paid, 2. Application is correct and 3. Register of disqualified directors)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
56
Q

When does a company need to register for corp tax?

A

Apply for reg online? Auto.

Apply by paper? Reg in 3 months or starting to do business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
57
Q

What resolution is required to change co reg office ?

A

Board - docs can still be send to old office 14 days after change

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
58
Q

What to include on IN01?

A
  • registered office
  • first directors (name and service address)
  • first shareholders (name, addres, shareholding)
  • co sec name and address
  • statement of capital (no of shares; type; total nominal value; name and addresses of SH)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
59
Q

How to amend articles ?

A

Special resolution - file at CH in 15 days of passing
File amended articles 15 days after taking effect

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
60
Q

PSC control - state on IN01. What types ?

A
  1. Holds MORE THAN 25% shares
  2. Holds MORE THAN 25% voting rights
  3. Holds right to appoint or remove majority of the board
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
61
Q

Public co - how to register ?

A

Issue resolvent docs (IN01, fee, memo of associating and articles), articles must be in plc format - there are the standard ones tailored, before trades needs to get a certificate of trading to show has met capital requirements and can trade and borrow. Can apply to CH for this (SH50)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
62
Q

How to apply to register as PLC?

A
  1. Special res
  2. App for reg (RR01) inc statement of compliance
  3. Fee
  4. Revised plc articles
  5. Balance sheet, statement from auditors, valuation report for any shares for non non cash consideration between date of balance sheet and pass special res

Don’t need a trading certificate!

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
63
Q

What is part of the companies constiution?

A

A company’s constitution consists of its 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.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
64
Q

How many directors must a private co have?

A

1

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
65
Q

When can a SH sue any of the members of the company?

A

The shareholder can sue any of the other members of the company if his membership rights are infringed. The shareholder has been entered on the register of members of the company and so is a member of the company. The statutory contract imposes obligations upon the members when dealing with each other, so that means that the shareholder may bring an action for breach of contract against other members of the company where his rights have been infringed.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
66
Q

Shareholder v member

A

SH person who buys and holds shares in a co having share capital. He becomes a member once his name is officially entered on members reg. Many co limited by guarantee do not have share capital so their members aren’t SH.

Members - holding shares in physical form.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
67
Q

Who in a partnership is an agent of the firm?

A

All partners

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
68
Q

What is included on memo of association?

A

The Memorandum will state that the people (subscribers) wish to form the company and have agreed to subscribe for the Shares.

The application for reg will include the name, details of SH, statement of capital

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
69
Q

What does ‘selling share at par’ mean?

A

Selling them for the nominal value (not selling them for what you paid) - par value = nominal value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
70
Q

Difference between public co & publicly traded co

A

Public companies, as the name suggests, can offer their shares to the public. However, a public company will not be able to gain the exposure to potential investors which it needs unless it becomes a publicly traded company (i.e. has been admitted to a recognised stock exchange, e.g. the London Stock Exchange, or AIM (alternative investment market)).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
71
Q

Can someone go in directors place to board meeting if they can’t make it?

A

Need special amendment in model articles

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
72
Q

When do first directors take office?

A

Certificate of incorporation - will be the individuals named as proposed officers on IN01

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
73
Q

How to appoint director?

A

Ordinary res OR board res

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
74
Q

When does person have to stop being director?

A

Under MA 18, a person will cease to be a director if a bankruptcy order has been made
against them or a doctor gives a written opinion to the company stating that they have
become physically or mentally incapable of acting as a director, and may remain so for more
than three months.

75
Q

How to notfy CH of new director

A

When a new director is appointed, the company must notify Companies House within 14 days
of the appointment (s 167(1)(a) CA 2006), and this will be done by filing form AP01 (for the
appointment of an individual director), or form AP02 (for the appointment of a corporate
director). The company must also enter the director on its register of directors and register of
directors’ residential addresses.

76
Q

Actual authority?

A

Actual authority arises where a director has consent from the other directors to act in a certain way, for example to spend money. It can be express actual authority or implied actual
authority to enter into the contract. The authority may be set out in the director’s service contract, or it may have been given following a discussion between the board of directors.
This is express actual authority.

Implied actual authority arises where the board has not
expressly permitted the director to act in a certain way, but the director has acted that way in the past and the board has not tried to stop the director or told them that they are not authorised to act in that way

77
Q

Apparent authority

A

Apparent authority is where the director acts without the company’s prior consent, whether express or implied, but still binds the company to the contract. Effectively the company
is estopped from denying the director’s authority. Apparent authority is based on a representation, by the company to the third party, by words or conduct, that the director is acting with the company’s authority. It is important to note that it is not the director’s actions which are significant for the purposes of ascertaining whether apparent authority exists; it is the company’s actions or omissions which must be considered.

The general theme of the recent case law on apparent authority centres around a director or other employee of the
company having apparent authority in the absence of information from the company to correct
this impression

78
Q

If director doesn’t have actual (express or implied) or apparent authority, who is liable?

A

If a director does not have actual or apparent authority, the director is personally liable to the
third party and the company is not a party to the contract or liable to the third party

79
Q

Director FIXED 2 year contract - who approves?

A

Fixed 2 year - ordinary res. 10 year guaranteed with 1 year notice period? Board

If notice period 2 years this is the bit that would be void and would be terminable on ‘reasonable notice’

80
Q

What requirements if having ordinary res for service contract?

A

Under s 188(5), when the board proposes an ordinary resolution under s 188, it 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.

If the ordinary resolution is proposed by written resolution, a copy of the memorandum must be circulated to the shareholders along with the written resolution.

81
Q

Requirement for D’s service contract throughout year?

A

Directors’ 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
a year after termination of the service contract (s 228 CA 2006). Shareholders have the right under s 229 CA 2006 to inspect them without charge and within seven days of requesting to
see them.

82
Q

How to remove director?

A

The shareholders can remove a director by ordinary resolution passed at a general meeting
(s 168 CA 2006). Special notice is required for a resolution to remove a director (s 168(2)
2006). Special notice is explained in s 312 CA 2006:

his means that the ordinary resolution to remove the director is not effective unless notice of the intention to pass it has been given to the company at least 28 days before the general
meeting at which the resolution is proposed.

Once the company has received this special notice, it must inform the director in question forthwith, and, where practicable, give its shareholders notice of the resolution in the same manner and at the same time as it gives notice of the general meeting. Where this is not practicable, the company must give its shareholders notice at least 14 days before the
general meeting, by advertisement in a newspaper having ‘an appropriate circulation’, or any other manner allowed by the company’s articles. The director in question is entitled to speak at the general meeting, and also to require the company to send copies of any written representations the director wishes to make to the shareholders (s 169 CA 2006).
The director can use this as an opportunity to argue that they should not be removed. The legal advice they have obtained and the evidence collected during the 28 days or more
between notification of the proposed resolution and the meeting itself will help them to do this
effectively

83
Q

Can the board call a meeting 28 days or less after special notice has been given

A

If, after special notice has been given to the company, a general meeting is called for 28 days or less after the notice has been given, the notice is deemed to have been properly given
(s 312(4)).

This provision is designed to prevent the board from calling a meeting before the 28 days’ special notice has expired in order to frustrate the shareholders’ intention to dismiss the director

84
Q

What are the directors duties to the company?

A

Fiduciary duties:
1. Act wiithin powers (s171) - a. act in cos constitution and b. exercise powers for intended purpose
2. Duty to promote success of company (s172) - subjective test just need due regard to following factors a. consequences of decisions in lomg run. b. interest of co employees c. business relationships d. impact on community and environment e. reputation of co f. act fairly between members.
3. Duty to exercise independant judgment (s173)
4. Exercise reasonable skill and care (objective and subjective)
5. Avoid conflicts of interest (s. 175) - relates to contracts co not a party! Can be authorised by directors. Won’t apply in quorum - EVEN IF MA14 EXCLUDED
6. Duty not to accept benefits from 3rd parties (s. 176) - stil breach even if don’t give favourable terms
7. Duty to declare interest in transaction (s 177) - make disclosure before co enters transaction. Exceptions: directors are aware, don’t give rise to conflict, Director isn’t aware of arrangement, concerns terms of director’s service contract (TRansaction WITH co) - duty to disclose even if MA14 disapplied!!!!!!!!!!!!

85
Q

Remedies for a breach of director’s fiduciary duty?

A

Same as equitable principles and one common law for neg
- account for loss
- equitable comp for loss
- Recission
- Injunction
- Restoration of prop
- s174 NEGGY DAMAGES - breach of skill and care

86
Q

What is duty under s 182?

A

If director interested in a transaction the company has already entered into, need to declare AS SOON AS REASONABLY PRACTICAEBALE unless declared under s177.

More formal than 177, must be at a board meeting, or by notice in writing if sent to all directors, or by general notice of interest at BM
- same exceptions as 177
- crim offence

87
Q

What is wrongful trading?

A

In a claim against a director for wrongful trading under s 214 IA 1986, the court may order a
director to contribute to the company’s assets if:
* the company has gone into insolvent liquidation or insolvent administration;
* before commencement of the winding up of the company, the director knew or ought to have concluded there was no reasonable prospect that the company would avoid
insolvent liquidation; and
* that person was a director of the company at the time.
There is a defence available to directors for wrongful trading: a director will not be liable for wrongful trading if they took every step with a view to minimising the potential loss to the
company’s creditors as they ought to have taken.

2 party test: There is a two-part test to apply to ascertain
whether the director’s conduct is caught by this defence. The test examines the facts that a director ought to have known or ascertained, the conclusions which they ought to have
reached and the steps which they ought to have taken. The standard expected of a director is that of a reasonably diligent person having both:
* the general knowledge, skill and experience that may reasonably be expected of a
person carrying out the same functions as are carried out by that director in relation to
the company, and
* the general knowledge, skill and experience that that director has.

88
Q

How to minimise success of wrongful trading claim?

A
  • seek professional advice from solicitors and/or accountants at the first sign of problems;
  • limit spending;
  • check the company’s accounts regularly;
  • keep records of their own actions.
89
Q

What is fraudulent trading?

A

A director will be liable for fraudulent trading if, in the course of the company being wound up, it appears that the company’s business has been carried on with intent to defraud creditors of the company or creditors of any other person, or for any fraudulent purpose.
In such a case, the court may declare that any persons who were knowingly parties to the carrying on of the business in such a manner are liable to make such contributions (if any) to
the company’s assets as the court thinks proper

HARD TO PROVE INTENT, often bring wrongful trading and fraudulent trading together (liquidator). Potential crim conviction.

90
Q

Misfeasence

A

Breach of one of the director’s duties - can be force to contribute.

91
Q

What is a substantial property transaction?

A

Substantial property transactions are governed by ss 190–196 CA 2006. A substantial property
transaction (‘SPT’) is 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.
If the board wishes to enter into an SPT, the shareholders’ consent by way of ordinary resolution is required.

NON CASH ASSET - LOAN IS DIFFERENT

92
Q

What is a person connected with a director?

A
  • member of family (spouse, child/step child, parents, partner, child of partner)
  • company which director or connected person: a. owns at least 20% of body corp shares; or, entield to exercise control of MORE THAN 20% of voting power at GM
93
Q

What is substantial?

A

Auto if OVER £100k

More than £5k AND more than 10% NET ASSETS VALUE (look at balance sheet)

Don’t need SH approval for wholly owned subsids/holding

94
Q

Effect of SPT?

A

Voidable - account for gain and indemnify co for loss or damage:
1. director of co or holding co with whom the company entered into the arrangement
2.any person connected with director invovled or its holding co
3. any director who authorised

95
Q

How to authorise loan to director or holding co?

A

Ordinary res - 15 days before GM, at reg office, memo setting out terms of loan.

Written res? Memo sent out with written res

96
Q

Exceptions to ordinary res for loans to D

A
  1. Expenditure on business - max £50k
  2. proceedings re co
  3. Defending regulatory proceedings
  4. minor business transactions - £10k

No ordinary res? VOIDABLE
Director who loan and authorised, jointly and serably liable

97
Q

PAy director leaving?

A

Yes need ordinary res. 15 days before GM have terms of payment

Written res? send with res

98
Q

Disqualification as director

A

2 - 15 years

2 - breach of fiduicary duty & not filing
15 - seeking money from investors when insolvent

Most common - unfit director of insolvent co

99
Q

What is a de jure director?

A

The girlfriend is a de jure director. She has been validly appointed, and the fact that she does not take part in the running of the company does not change this.

100
Q

Difference between allotment and issuing shares?

A

Shares are allotted when a person gets the unconditionla right to be registered on the reg of members.

Issue happens when the person is subsequently registered

101
Q

Rules in articles pre Oct 2009

A

Articles always contained an upper limit (authorised share capital) - if the articles havent been amended since then can remove by ORDINARY RES - even though amending articles is usually special BUT THE ORDINAR RES MUST BE FILED AT CH

102
Q

Who has authority to allot new shares?

A

1 class of shares? Board. under s550

Pre Oct 2009 articles - need ordinary res to activated s550!

The company’s articles of association may restrict the directors’ power to allot shares under s 550. Companies can remove this power by amending the articles by special resolution.

s551: Public co, or private with multliple class of shares needs ordinary res:
1. state max number of shares for allotment;
2. expiry for allotment (can’t exceed 5 years after res passed)

the authority to allot must state the maximum amount of shares that may be allotted under the authorisation and the date on which the renewed authority will expire.

Once the authority to allot has expired, it may be renewed by ordinary resolution of the company for a further period not exceeding five years.

Instead of s 551, articles may contain powers but need max amount and expiry stated (no more than 5 years)

103
Q

What are pre-emption rights?

A

Co can’t offer ordinary shares giving right to vote, or shares that can be converted to ordinary, without giving existing SH first right of refusal to keep voting power in same proportion. Must be equal AS FAR AS PRACTICABLE. Shares must be on same or more favourable terms

104
Q

What must the offer for pre-emption be in form of?

A
  1. state date for acceptance
  2. can’t be LESS than 14 days;
  3. can revoked before this time

Don’t apply to bonus shares
Don’t apply if consideration whole or part cash
Don’t apply if alloted / shared due to EMPLOYEE SHARE SCHEME

105
Q

CAn pre-emption rights be excluded?

A

The CA 2006 allows private companies to exclude pre-emption rights by provisions contained in its articles, either generally or in relation to particular allotments (s 567 CA 2006). This
will override the statutory provisions contained in s 561. So before advising a client on how to disapply pre-emption rights, it is important to check the company’s articles first, to check
whether alternative provisions already exist. Any provisions in the company’s articles could be removed by special resolution if the company no longer wants them to be included. Note that
there are no pre-emption rights in the Model Articles

Depends on co type!

106
Q

Disapply pre-emption rights in private co with 1 share class?

A

Under s 569 CA 2006, the shareholders of a private company which has only one class of shares may pass a special resolution disapplying the existing shareholders’ pre-emption
rights. So companies which had authority to allot shares under s 550 can disapply any preemption rights by special resolution under s 569

107
Q

Disapply pre-emption rights in public co or private co with more than 1 share class?

A

When the company is a plc or has more than one class of shares, how pre-emption rights are disapplied will depend on the nature of those companies’ initial authority to allot shares.

We saw in 4.3.2.2 that companies which do not have automatic authority to allot under s 550 will need to pass an ordinary resolution under s 551 CA 2006 to give the directors authority to allot shares. If the ordinary resolution gave a general authority to allot (rather than authority in relation to a specific allotment) then s 570 allows the company to remove the pre-emption rights just by passing a special resolution. Disapplication will last as long as the directors’ authority under s 551.

If the authority to allot shares contained in the s 551 ordinary resolution was in relation to
a specific allotment, s 571 also allows companies to disapply pre-emption rights by special
resolution. However, the special resolution must be recommended by the directors of the
company (s 570(5) CA 2006) and before proposing a special resolution. Under s 571(6) the
directors must make a written statement setting out:
* the reasons for making the recommendation;
* the amount the purchaser will pay; and
* the directors’ justification of that amount.
The directors’ written statement must be circulated to the shareholders along with the notice
of the general meeting, or, if the resolution is proposed as a written resolution, it must be sent
out with the written resolution (s 571(7) CA 2006).

108
Q

MA 21?

A

Pay for shares up front - can exclude

109
Q

What does the premium on shares become?

A

Put in premium account and becomes share capital

110
Q

Resolutions to be filed at CH in 15 days?

A
  1. ALL SRs
  2. Ordinary res: any ordinary resolution removing the authorised share capital in a pre-CA 2006 company
    Any ordinary resolution to activate s 550 in a pre-CA 2006 company
    Any s 551 ordinary resolution granting directors authority to allot
111
Q

Forms to be sent to CH in one month of allotment?

A
  • Return of allotment and sttement of capital
  • new person with signficant control, change which band someone in, person ceasing to be SC
112
Q

When to amend regsiters after allotment?

A

Within 2 months - own members and PSC if necessary

113
Q

When to prepare share cert?

A

2 months

114
Q

What is MA26?

A

can’t restrict someone selling shares but MA26 gives directors discretion not to admit someone on reg of memebers- would be beneficial owner - old owneer be paud dividends, and go to meeting so must vote in accordacne with new member and pay them dividends

115
Q

Stamp duty on shares?

A

If sale price over 1k - 0.5% (pound to nearest £5!) NOT PAYABLE IF GIFT
Miniumum SD is £5

116
Q

Maintenance of share capital - what are the consequences and exceptions?

A

This principle has a number of consequences, which include:
* dividends cannot be paid out of capital, just out of distributable profits; and
* the company must not generally purchase its own shares.

There are exceptions to these rules. They are:
* a company can buy back its own shares as long as the correct procedure is followed
(s 690);
* a company can purchase its own shares under a court order made under s 994 CA 2006 to buy out an unfairly prejudiced minority shareholder; and
* a company can return capital to shareholders, after payment of the company’s debts, in a winding up.

117
Q

Buy back share procedure for off market shares private co

A
  1. Firstly, the company’s articles must not forbid buyback (s 690(1)).
  2. The shares must be fully paid (s 691(1)).
  3. The company must pay for the shares at the time of purchase (s 691(2)).
  4. The shares must usually be paid for out of distributable profits or the proceeds of a fresh issue of shares made for the purpose of financing the purchase (s 692(2)(a) CA
    2006). What is meant by distributable profits is explained in s 830 CA 2006. They are the company’s accumulated, realised profits less its accumulated, realised losses. They are shown on the bottom half of the company’s balance sheet, under profit/loss reserve.
    Please see 12.9.4 for a full explanation of company balance sheets.
  5. The shareholders must pass an ordinary resolution authorising the buyback contract (s 694
    CA 2006).
  6. A copy of the buyback contract, or a summary of it, must be available for inspection for at least 15 days before the general meeting and at the general meeting itself (or be sent
    with the proposed written resolution when or before it is circulated (s 696(2)).
  7. Under s 702 CA 2006, a copy of the buyback contract, or, if the contract is not in writing, a written memorandum setting out its terms, must be made available for inspection at
    the company’s registered office or SAIL as soon the contract has been concluded, for a period of ten years starting with the date of the buyback
118
Q

Paying out of capital for buy back shares?

A

Need special res as well as ordinary, issue notice in gazette, local newspaper, or to creditors (in 7 days of being passed)

Also need auditors report and statement of solvency!

Pay between 5 -7 weeks after SR

119
Q

Waht is wrongful trading?

A

Court will make an order for a director to contribute to co’s assets if:
1. in insolvent liquidation/administration;
2. before winding up director knew, or ought to have known, no prospects of avoiding liquidation;
3. person was a director of a company at the time.

120
Q

Who decides dividends?

A

Under MA 30, it is the directors who decide whether or not to
recommend that a dividend be paid and how much it should be. The shareholders must then
pass an ordinary resolution in order for this to be approved (or ‘declared’

121
Q

What is a negative pledge clause,

A

Stops company making any further charges in priority to the floating charge without charge holders permission. If subsequent lender has ACTUAL NOTICE of this clause then the fixed charge will be subordinate. Clause will be in certified copy of charge doc on CH. have to actually search CH to have actual knowledge. Will usually covenant (promise) there are no earlier charges

122
Q

Resolution for preference shares?

A

CHECK ARTICLES - not amended? At common law, all shares in the capital of a company will be treated as ranking pari passu unless any separate class rights are clearly documented. It is therefore important that the rights attached to the new class are recorded in a document to which the company and its shareholders are bound. Therefore, the Articles will need to be amended to reflect the rights attached to the preference shares. This is a constitutional change and requires a special resolution.

123
Q

What are non participating shares

A

Option A is wrong because the preference shares are non-participating and therefore there is no right to participate in return of capital beyond repayment of the paid-up nominal value of the preference shares. No preemption rights

124
Q

What’s better, fixed charge or legal mortgage

A

Legal mortgage is better and highest level of security

125
Q

How to know if in a partnership?

A
  1. Do all individuals make decisions
  2. Whose name on title deeds
  3. How are profits split
126
Q

What decisions are made unanimously in PA ?

A

All decisions made by majority accept:
1. Changing nature of business
2. Appointing new partner
3. Changing terms of partnership agreement

127
Q

What are drawings?

A

Income profits drawed down

128
Q

How to expel a partner?

A

Contrary to otherwise in the PA, need unanimous vote (not going to happen)

129
Q

When does a partnership come to an end under PA?

A

A partnership which continues indefinitely until notice is given under the PA 1890 is known as a partnership at will. Under the PA 1890, there is no requirement for the notice to be of a certain length of time, or for the notice to be in writing (unless the partnership agreement is a deed). The effect of this is that a partner can end the partnership with immediate effect by merely saying to the other partners that they wish the partnership to end.

Also:
1. partner retires
2. expiry of fixed term
3. death / bankruptcy
4. nottice of dissolution who has, by order of the court, granted a charge over their hare of the prop for a debt owe ALONE.

Can apply to the Court for dissolution.

When this happens, assets sold and leaving partner gets share - can insist on busines being sold so other partners cant buy him out

130
Q

Interest rate on partner’s share?

A

5% per annum on the value of their partnership share until they receive their share from the other partners, or such sum as the court may order representing the share of profits made which is attributable to the use of their share

131
Q

What is goodwill valued at?

A

Goodwill can be described as a business’s reputation and the value of its clients and
contacts. When a business is sold as a going concern, part of the purchase price will be for the business’s goodwill, because the business is up and running and can continue as before, retaining its clients and reputation. Goodwill is difficult to value, but commonly, two years’ profit is taken as the value for goodwill.

132
Q

Under s 44 PA 1890, when a partnership business is sold, the proceeds of sale of the business or its assets are applied in what order (unless the parties have decided otherwise by agreement)

A
  1. creditors (pay from private assets if not enough)
  2. partners who lent money to firm
  3. partnersh’s capital entitled
  4. surplus shared between partners in accordance with agreement
133
Q

Duties under PA 1980

A
  1. open with eachther re relevant info re partnership
  2. account for private profits earned without consent
  3. do not compete with firm - if does need to account for profits and pay over
    4.bear share for any loss
  4. indemnify partners who have borne more than their share
134
Q

When is the partnership bound by a contract?

A

Entered into with express or implied authority.

Entered into with apparent authority and the following apply:
1. relates to business carried out - objective
2. one partners in firm would usually have authority to carry out - objective
3. one party did not know the other did not have authority - subjective
4. other person dealing with a person they know or believe to be a partner - subjective

135
Q

Why is a novation agreement relevant to a partnership?

A

In a novation agreement, a retiring partner will be released from an existing debt, by entering into a contract with the creditor and the other partners, and possibly an incoming partner. Under this contract of novation, the creditor will release the original partners from their liability under the contract and instead the firm as newly constituted will take over the liability.

It may be that a partner retires and no new partner joins. In this case, in order to ensure that the novation is contractually binding, either there must be consideration for the creditor’s promise to release the retiring partner from the liability or the contract must be executed as a deed. Such agreements are rare since they reduce the number of people the creditor can sue if the partnership does not pay the debt, so the creditor will only agree to it if it benefits them in some other way.

136
Q

Do you need notice in gazette for partners retirement/expulsion

A

If the reason for ceasing to be a partner is death or bankruptcy (rather than retirement or expulsion), no notice of the event is required. The estate of the deceased or bankrupt partner is not liable for partnership liabilities incurred after the death or bankruptcy.

137
Q

can you wind up a partnership?

A

6.11 Insolvency Although a partnership is not a legal person in its own right, an insolvent partnership can be wound up as an unregistered company or may use the rescue procedures available to companies, such as a voluntary arrangement with creditors or an administration order of the court. The individual partners may be made bankrupt if an obligation is enforced against their personal assets and there is still not enough to meet the partners’ liabilities.

138
Q

LLPs - reduces to 1 member?

A

Carries on for ore than 6 months? Perosn jointly and severably liable for LLPs debts incurred after 6 months

139
Q

What security can GPs and LLPs provide

A

GPs - fixed charge. LLPs - fixed, floating and debentures

Limited liability partnerships must keep a register of charges, along with a copy of every charge requiring registration, at its registered office. The register should include all charges affecting the LLP’s property and floating charges. Any creditor or member of the LLP must be allowed to inspect the register without paying a fee. Limited liability partnerships are required to register charges with the Registrar of Companies, and which form to use depends on the nature of the charge

140
Q

Model articles for LLPs?

A

There is no LLP equivalent to the Model Articles provided for companies – members of an LLP have a blank slate as far as management structure and rules are concerned, and there is no distinction between owner (shareholder) and manager (director) as with companies

141
Q

Expulsion of members under LLP

A

Under the LLP Regulations 2001, members can leave the LLP by giving reasonable notice to the other members. Members cannot be expelled, so, if the members wish there to be a right of expulsion, this must be included in the LLP agreement.

If the members wish the bankruptcy of one of their number to automatically cause termination of that person’s membership of the LLP, they must stipulate this in the LLP agreement. Legislation does not provide for this otherwise

142
Q

how to work out trading profits/loss?

A

Chargeable receipts LESS deductible expenditure LESS capital allowances = trading profit/loss
Capital allowances - full expense cost on new items, or AIA on second hand/refurb. WDA of 18% on pool

Applies to sole tarders/partners/companies. However, co pay corp tax and are entield to certain trading reliefs

143
Q

Relief for loss: unincorp business

A

Chose which one to claim, if baalnce of loss remaining can claim partially under another. Partners decide individually. Must apply for relief.

  1. start up loss (early trading loss) - suffers loss in first 4 years, carried back against TOTAL income in the 3 years prior to set up - i.e income from former employer. Earlier years before later. CAP GREATER OF £50k or 25% OF TAX PAYERS INCOME - cap is only from sources other than trade
  2. Carry across/one-year cary back - a. set against total income from the same tax year; or b. set against total income from the tax year preceding the tax year of the loss. Can choose which first but set against total loss! LOSE PERSONAL ALLOWANCE
  3. Set off against capital gains - same tax year - used when CARRY ACROSS relief used but not all absorbed Earlier years before later. CAP GREATER OF £50k or 25% OF TAX PAYERS INCOME - cap is only from sources other than trade
  4. Carry-forward - if business makes profit in subsequent years, don’t PERSONAL ALLOWANCE, notify HMRC if your intention in FOUR YEARS SINCE LOSS. carry forward indefinitely
  5. Carry back of terminal tradign loss - FINAL 12 MONTHS OF TRADING, set against trading profits in final year, carried back against profits in THREE YEARS precedeing year of loss. Can use in first year profits that aren’t of trade. No cap, Could get tax rebate. 4 years after enf od tax year to claim!
  6. Carry forward relief on incorp - If a taxpayer incorporates their business by transferring it to a company wholly or mainly in return for shares, any trading losses which have not been relieved can be carried forward and set against any income they receive from the company, such as their salary or dividends. To be classed as ‘wholly or mainly in return for shares’, 80% or more of the consideration for the business transferred must be shares in the company. Order of income you chose
144
Q

What are exempt VAT supplies

A

Supply of resi land, postal services, education and health services

145
Q

Zero rated supplies

A

books, certain food and water

146
Q

What is not subject to income tax?

A

Certain income is not chargeable to income tax, including interest on damages for personal injuries or death, interest on savings certificates, certain state benefits, premium bond winnings and income from investment in an individual savings account (ISA).

147
Q

What is subject to income tax?

A

(a) trading income: profits of trade, profession or vocation. This applies to sole traders,
trading partnerships, sole practitioners and professional partnerships;
(b) property income: rents and other receipts from land in the UK;
(c) savings and investment income: interest, annuities and dividends;
(d) employment and pensions income, including social security payments such as sick pay and maternity pay; an

148
Q

Total income - allowable relief - personal allowances

A

What is allowable relief?

To benefit from this relief, interest must be payable on a ‘qualifying loan’, including:
* a loan to buy a share in a partnership, or to contribute capital or make a loan to a
partnership;
* a loan to invest in a close trading company; and
* a loan to personal representatives to pay inheritance tax

149
Q

What is the personal allowance?

A

£12,570 and applied in following order:
1. NSNDI
2. Savings
3. Dividend

Reduces by £1 for every £2 over 100k

Can trasnfer £1,260 of personal allowance to spouse if don’t use

Blind person allowance - £2,870

Where individuals are in receipt of gross property income
or gross trading income below £1,000, the income will not be subject to income tax

150
Q

Personal savings alloance

A

savings income - first £1,000 will be tax free if the income band is £0-£37700 (not inc personal allowance)
£500 tax free - £125,140.

£125,140+? None

151
Q

Divdend allowance

A

£1k - all are allowed

152
Q

Are dividend allowance and savings allowance, allowances like personal allowances

A

Although the PSA and dividen allowance are described as allowances, HMRC does not
regard these as exemptions in the same way as the personal allowance. Instead, the PSA and dividend allowance reduce the rate of tax applied to these types of income to 0% (‘nil rate’). The result is that the PSA and dividend allowance are not used at this stage with the personal allowance to reduce taxable income. Only the personal allowance is deducted when calculating taxable income. If the PSA and dividend allowance apply, it just means that savings and dividend income will be taxed at 0%. This will become clearer when you consider the calculation in the example at

153
Q

Taxed in slices

A

Bottom first - NSNDI
Middle slice - Savings income
Top slice - Dividends

154
Q

rates of tax

A

Basic tax payer (not includiing PA) = £0 - £37,700
Higher = £37,700 - £125,140
Additional = £125,140+

NSNDI (bottom slice) = basic, 20, higher, 40, additional, 45%
Savings income (middle) = starting: 0 (up to £5,000), basic rate: 20%, higher: 40%, additional 45%
Dividends (top slice) basic = 8.75%, upper = 33.75%, additional = 39.35%

155
Q

What is not a deductable expenditure for trading profit?

A

Something not in the course of business, clietn entertainment

156
Q

When a company lends money to a ‘participator’ in a ‘close’ company (in essence, a shareholder in a company controlled by no more than 5 shareholders, or where all the shareholders controlling the company are also directors – both of which tests are satisfied on the facts) special rules apply. What are they?

A

Provided that the loan is made to a participator other than in the ordinary course of the company’s business (here it is a retail trading company, not a money-lending business), and that loan is over £15,000 (here it is £20,000), the company must pay corporation tax at a rate of 32.5% (s455 Corporation Tax Act 2010). This tax will be repaid to the company if the loan is later repaid (or if it is written off).

157
Q

Capital gains tax?

A

Basic - 10%, additional 20%

Resi: not main reisdence? 8% surgcharge on above

Business asset disposal relief = 10%
Gains by PRS and Trustees = 20%, or 28 for resi prop

Annual exemption 6k

158
Q

Replacement business asset

A

roll over relief, CGT postponed, buy more assets, bought 1 year before or 3 after, applied in 4 years from end of tax year

159
Q

Rollover incorp tax

A

CGT postponed, sell interest in partnership/sole trader to a company, CGT is rolled over into the shares received - same business new owner, need to sell with all assetsn - LOSE ANNUAL EXEMPTION AN HMRC APPLIES AUTO

160
Q

Hold-over relief

A

Relief on gift on some business assets, if sell gift giftee pays gain (must be assets used in giftees tarde, shares in trading co, shares in personal trading) If giftee is co dont count

161
Q

Business asset disposal relief

A

flat rate 10%, , business disposed as going concern, business must have been owned for 2 years prior to disposal, mmust be assets used in businesss and not investments

Co shares - co is trading, 5% of ordinary shares, entitled to 5% of profits, disposer is an employee 2 years before disposal INVETSMENT CO NO - lifetime cap 1mill

162
Q

Does carry back releif apply ot CGT?

A

No - losses can only be carried forward

163
Q

When must a v large co (over 20mill) pay tax?

A

tax in four instalments during the accounting period. The first payment is due two months and 13 days after the start of the accounting period and the remaining instalments at three monthly intervals thereafter.

164
Q

The company is a close company. It is controlled by fewer than five participators. Three shareholders have control of the company. (A ‘participator’ is a person owning [or having the right to own] shares in the company and ‘control’ exists in the hands of those having [or having the right to acquire] more than half the shares in the company). Where a close company lends money to a participator, as here to the shareholder, there are tax implications.

A

Where a close company lends money to a participator for a sum over £15,000 (so no exceptions apply) as here the company must pay HMRC a sum equivalent to 32.5% of the loan.

165
Q

Hold over relief - CGT

A

Rol over elief on gift of business asset

166
Q

When is CGT due?

A

f they had not chosen to apply hold-over relief, so that the father would have to pay CGT, the dates of payment stated are wrong; CGT would need to be paid by 31 January following the end of the tax year or 30 days after making an assessment if later.

167
Q

because if the supermarket’s input tax exceeds output tax then the supermarket will be entitled to receive a tax rebate from HMRC.

A

true

168
Q

qualifying business asset - sole tarder

A

When an individual claims the relief the annual exemption cannot be set against the gain before it is rolled over.

169
Q

Depreciation on fixed assets not tax deductible

A

true

170
Q

Are cahrity donations exempt from corp tax

A

yes

171
Q

Sole tarder - carry forward reeif

A

only use from same trade, carry forward, can use personal allowance from income for different trade

172
Q

carry-across/one-year-back relief

A

must be applied until income is 0 so can’t keep PA

173
Q

What can you deduct for CGT

A

(1) any initial expenditure (including the acquisition cost and any incidental costs of acquisition, such as legal fees); (2) any subsequent expenditure incurred to enhance the value of an asset (such as the building of an extension); and (3) any incidental costs of disposal, such as legal fees. However, you cannot deduct the costs of any normal maintenance or repair. This means the cost of repairing the roof cannot be deducted.

174
Q

Pre charge bail

A

60 - 90 days (custody officer), further extensions from inspector to 6 months, sI to 9 months then mag then mag up to a year and bwyond

175
Q

Detention clock

A

3 hour pause for breach of pre charge bail

176
Q

IDPC

A

D get IDPC all offences and triggered on charge

177
Q

Bail process

A

Application asap after decision, if P wants to appeal then notify CC at once- hear appeal no later than business day after served reasonabl p

178
Q

Mag

A

Sentence 6 months

179
Q

19-21

A

Young offenders institute

180
Q

2 or more either way offences

A

12months

181
Q

Avoid newton hesring

A

Basis of plea - instigated by d usually

182
Q

You

A

12-17, legal rep, 14 years, absconding, protect for serious personal injury

183
Q

Train orders and detention

A

At least 4 months but not exceeding 24 months youth court

SQE 1 (Mine) (8 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions