Business Law - Decision Cheat Sheet

Question 1

How can partners regulate their business arrangements in a partnership?

Answer 1

By drafting a written partnership agreement

They can regulate their business arrangements however they choose, provided it is not inconsistent with the Partnership Act.

Question 2

When is unanimity required in decisions within a partnership?

Answer 2

Unanimity is required for:
* Changes to the nature of the business
* Introducing a new partner
* Expelling a partner
* Altering the partnership agreement

Question 3

What is the rule with admitting a new partner in a partnership?

Answer 3

A new member may be admitted only with the unanimous approval of all existing members in the absence of an express provision in the partnership agreement.

Question 4

What results in the dissolution of a partnership?

Answer 4

Dissolution can result from:
* Fixed term expiring
* Notice of intention to dissolve by any partner
* Death or bankruptcy of any partner
* Unlawful business continuation
* Court application after relationship breakdown

Question 5

How is partnership liability determined?

Answer 5

Determined by:
* Actual or apparent/ostensible authority of the partnership
* Sections 9 and 17 PA for which partners are liable
* Release, novation, or indemnity for existing debts
* Notice to creditors and advertisement in London Gazette for future debts

Question 6

What is required within a Board Meeting (BM)?

Answer 6

Requirements include:
* Any director can call a BM
* Reasonable notice must be given
* Notice contents: date, time, place, means of communication
* Quorum of two directors
* Voting by simple majority

Question 7

What are the voting requirements in a Board Meeting?

Answer 7

Voting is by:
* Simple majority (show of hands or oral assent)
* Chairperson has a casting vote in case of deadlock

Question 8

What are the requirements for a general meeting (GM)?

Answer 8

Requirements include:
* Directors call a GM
* 14 clear days’ notice required
* Quorum is two
* Voting by show of hands or poll

Question 9

What is the difference between a poll vote and a show of hands in a general meeting?

Answer 9

Poll vote:
* One vote per share
Show of hands:
* One vote per member unless a poll is demanded

Question 10

What is required for a Special Resolution at a general meeting?

Answer 10

75% of votes cast by those entitled to vote in person or by proxy.

Question 11

What is a Substantial Property Transaction (SPT)?

Answer 11

SPT involves:
* Acquisition/disposal of a non-cash asset
* Parties include the company and a director/person connected to a director
* £5000 or less is not substantial; more than £100,000 is substantial.

Question 12

What are shareholders’ rights regarding requisitioning a general meeting?

Answer 12

Shareholders holding 5% shareholding may requisition a GM.

Question 13

What powers do shareholders have with a 10% shareholding?

Answer 13

Shareholders with more than 10% can refuse consent to short notice of a GM.

Question 14

What is required for the declaration of a dividend?

Answer 14

Ordinary Resolution required and profits must be available.

Question 15

What is the procedure for a share transfer?

Answer 15

Steps include:
* Signing a stock transfer form
* Paying stamp duty (if applicable)
* Submitting the form and share certificate to the company
* Directors passing BR to approve/reject the transfer

Question 16

What is the role of the chairperson at a general meeting?

Answer 16

Chairperson does not have a casting vote; resolutions are only valid if sufficient notice is given and a quorum is present.

Question 17

Fill in the blank: A director with a personal interest in a matter will be prevented from being counted in the _______.

Answer 17

quorum

Question 18

True or False: A private company can issue shares with different classes and rights without any resolution.

Answer 18

False

Question 19

What is required for the appointment of a director to office?

Answer 19

Either Board Resolution or Ordinary Resolution.

Question 20

What is the requirement for a buyback of shares from profits?

Answer 20

Ordinary Resolution required, and shares must be fully paid.

Question 21

What must be checked before declaring a dividend?

Answer 21

Check profits are available as per s830 CA and MAs 30-35.

Question 22

What is the minimum percentage of shareholding required to block a special resolution?

Answer 22

More than 25%

Question 23

What happens if pre-emption rights are disapplied?

Answer 23

Directors may allot shares without applying pre-emption rights or with modifications determined by the directors.

Question 24

What must be available for payment during a share buyback?

Answer 24

Distributable profits

Payment can also be made from a fresh issue of shares.

Question 25

What type of resolution is required to approve a buyback of shares from capital?

Answer 25

Special Resolution (SR)

Question 26

Can holders of shares being bought vote on the buyback?

Answer 26

No, their votes do not count.

Question 27

How long before the General Meeting must the buyback contract/summary be made available?

Answer 27

15 days

Question 28

What forms must be filed within 28 days after a share buyback?

Answer 28

SH03 and SH06

Question 29

What must directors confirm about the company's solvency before a buyback?

Answer 29

They must make a Statement of Solvency (SOS).

Question 30

What is the maximum time frame for filing the SOS and auditors' report after a buyback resolution?

Answer 30

5 weeks

Question 31

What is a Negative Pledge?

Answer 31

It prohibits a company from creating later charges with priority over a floating charge without permission.

Question 32

What happens if a charge is not registered within 21 days?

Answer 32

The charge will be void against the liquidator/administrator and other creditors.

Question 33

What is a Creditors’ Voluntary Liquidation (CVL)?

Answer 33

A process commenced by an insolvent company, requiring a Special Resolution.

Question 34

What is a Members’ Voluntary Liquidation (MVL)?

Answer 34

A process commenced by a solvent company, requiring a Special Resolution.

Question 35

What is the role of a liquidator?

Answer 35

To take over the company and investigate past transactions.

Question 36

What is the time frame for setting aside floating charges before insolvency?

Answer 36

2 years for connected persons, 12 months for unconnected persons.

Question 37

What is a preference in the context of insolvency?

Answer 37

An arrangement that puts a creditor in a better position compared to others in insolvency.

Question 38

How far back can preferences be set aside?

Answer 38

6 months, or up to 2 years if in favor of an associate.

Question 39

What constitutes a transaction at an undervalue?

Answer 39

A gift or sale where consideration is significantly less than the property's value.

Question 40

What is the order of distribution of an insolvent company’s assets?

Answer 40

* Fixed charge holders * Winding-up expenses * Preferential debts * Unsecured creditors * Shareholders

Question 41

What is the purpose of initiating administration?

Answer 41

To rescue the company and/or enable it to be sold as a going concern.

Question 42

What is a Company Voluntary Arrangement (CVA)?

Answer 42

A binding agreement between the company and creditors for part payment or delayed payment.

Question 43

What is the typical duration for a bankruptcy discharge?

Answer 43

One year

Question 44

What is the role of a trustee in bankruptcy?

Answer 44

To reclaim assets for creditors and minimize liability.

Question 45

What are the costs of bankruptcy?

Answer 45

Administrative costs and legal fees.

Question 46

What is an Individual Voluntary Arrangement (IVA)?

Answer 46

A process where a debtor appoints a nominee to supervise an agreement with creditors.

Question 47

What is required for an IVA proposal to be approved?

Answer 47

75% of creditors in value must agree, with at least 50% not being associates.