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SQE2 > business law - unfinished > Flashcards

business law - unfinished Flashcards

1
Q

what is on the IN01?

A
  • name
  • address
  • director and subscriber info
  • statement of capital
  • persons of significant control
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2
Q

what is a person with significant control?

A

someone with more than 25% of shares / voting rights

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3
Q

when is stamp duty payable on shares?

A

when the transfer is over £1000

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4
Q

what is an overdraft facility

A

an agreement with the bank allowing a business to overdraw on its account up to an agreed amount. compound interest.

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5
Q

what is a term loan

A

where a business borrows a fixed amount for a specified term which must be repaid at the end plus interest at regular intervals

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6
Q

what is a revolving credit facility

A

where the bank agrees to make a maximum amount of money available throughout an agreed period. good for companies with irregular income patterns.

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7
Q

what is a bullet payment

A

payment in one go at the end of a term

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8
Q

what is amortisation

A

equal instalments over a term

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9
Q

what is a balloon payment

A

unequal instalments with the final being the largest

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10
Q

when must charges be registered

A

within 21 days of creation, otherwise it is void

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11
Q

what is subordination

A

where creditors enter an agreement to change the priority of their charges

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12
Q

what is a negative pledge

A

where a company agrees not to create any charges with priority over the relevant floating charge

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13
Q

when must a taxable person be registered for VAT purposes

A

when the valuable of their taxable supplies exceeded £85,000 in 12 months

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14
Q

what are the 3 types of liquidation

A
  1. compulsory liquidation
  2. creditors voluntary liquidation
  3. members voluntary liquidation
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15
Q

what is the creditor hierarchy?

A
  1. fixed charges
  2. winding up expenses
  3. preferential debts
  4. floating charges
  5. shareholder
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16
Q

who are preferential creditors

A
  1. wages / employees
  2. HMRC in respect of PAYE and VAT
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17
Q

what are the aims of administration?

A
  1. to rescue company as a going concern
  2. to put creditors in a better position than winding up would have
  3. realise property to pay as many secured and preferential creditors as possible
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18
Q

what duty is an administrator under?

A

to perform duties in the best interests of the creditors as a whole

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19
Q

how is administration commenced?

A

by court order following application and hearing, or by company filing at court.

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20
Q

when can a court make an administration order?

A

if it is satisfied the company is likely to become unable to pay debts and the order will achieve one of the aims

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21
Q

what is the procedure for out-of-court administration?

A

serve notice of intention on the court, floating charge holders and a lender entitled to appoint a receiver, then file a statutory declaration that a company is unable to pay debts

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22
Q

how can a QFCH secure priority in ending a company?

A

appoint a receiver who will then have a primary duty to them

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23
Q

how does administration work?

A

the admin will put forward proposals to the creditors who can suggest amendments
- proposals are approved by a majority of present creditors in value vote in favour, as long as they don’t comprise more than 50% in value of the unconnected creditors

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24
Q

what happens to directors in administration

A

their powers cease but they remain in office

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25
when does administration end
usually 1 year after taking effect
26
what is a CVA
a written agreement between the company and all creditors
27
what proportions must approve a CVA
75% or more in value of creditors, 50% or more of unconnected creditors (secured creditors cannot vote)
28
when can a floating charge holder appoint a receiver
when their charge is over the whole of the assets and no other charge holder take priority
29
when is an individual insolvent?
when a debt is payable now but the debtor does not have enough money to pay, or a future debt has no reasonable prospect of being paid
30
how can a creditor prove personal insolvency
1. statutory demand of £5,000 or more and wait 3 weeks 2. statutory demand in respect of fututre debt over £5,000 and see if individual shows reasonable prospect of being able to pay, or applies to court to set aside 3. obtain a court judgment for a debt of £5,000 or more and attempt enforcement unsuccessfully
31
what is bankruptcy
process whereby debtor's assets pass to the trustee who will pay off as many debts as possible, usually discharged after a year
32
what is the procedure for bankruptcy
a. creditor owed over £5,000 brings petition. creditors may aggregate their debts owed b. OR debtor may apply for their own bankruptcy online and an adjudicator will decide whether to make an order within 28 days
33
what is a bankrupt individual permitted to keep
assets needed for day-to-day living, but receiver may sell these for cheaper alternatives
34
what happens to an individual's home in bankruptcy
the interest passes to the trustee unless someone else has an interest in which case the trustee needs a court order. after 1 year the creditors interest outweighs anyone elses. 3 years after order, it transfers back to the bankrupt
35
business restrictions for bankrupt person
a. cannot obtain credit of more than £500 without disclosing b. cannot be director c. cannot be management, promotion or formation of company without court order d. cannot trade under different name without disclosing e. any partnership ends
36
what is an IVA
alternative to bankruptcy a. proposals passed if 75% or more in value and 50% or more non associates agree
37
debt respite claim
a. mental health crisis gives 30 days on top of treatment b. normal breathing space gives 60 days
38
how many limited partners in limited partnershp
at least 1
39
when must a newly incorporated company register with CH
within 3 months
40
when must change of articles be filed at CH
within 15 days with the relevant resolution
41
limits on accounting ref periods
can't extend beyond 18 months or change within 5 months of end of last change
42
what is MA14
a director can't vote or count in quorum if they are interested in the transaction
43
minimum notice for general meeting
14 days
44
when is shareholder prevented from quorum
a. vote to buyback shares b. ratifying their own breach
45
who can demand poll vote
a. chair 2. directors c. 2 persons with right to vote d. one person with 10% of voting right
46
when may meeting be held on short notice
where 90% of voting rights AND majority of shareholders consent
47
who may call written res
5% or more of voting rights, directors must comply in 21 days
48
how long is written res circulated for
28 days
49
when must allotment of shares be registered
2 months
50
unfair prejudice
a. company affairs conducted in manner which is unfairly prejudicial to some or all interests; OR b. actual or proposed act or omission would be so prejudiced
51
derivative claim
instigated by shareholder for wrong done to company by director, arising from negligence, default or breach
52
how can director be appointed per MA17
by the board or by ordinary resolution
53
notification requirement for appointment and removal of directors
14 days
54
how to remove director
- special notice of 28 days - director may make oral rep
55
when does director not need to declare interest in proposed transaction
a. unaware b. cannot give rise to conflict c. directors are already aware
56
wrongful trading
a. insolvent liquidation occurs b. before winding up director [ought to have] known that there was no reasonable prospect of avoiding it c. they were a director
57
defence to wrongful trading
took every available step to minimise potential loss to creditors
58
fraudulent trading
in process of winding up, business has been carried on with intent to defraud creditors
59
misfeasance
breach of directors duty or fiduciary duty
60
Substnaital property transactions
a. director or connected person b. buys from or sells to company c. a non cash asset d. of substantial value i. over £100,000 OR ii. over £5,000 and 10% of net asset value
61
exceptions to approvals of loans to directors
a. company business up to £50,000 b. defending proceedings in relation to company or regulatory proceedings c. minor and business transactons up to £10,000
62
unanimous decisions in partnerships
a. change of nature b. new partner c. change of terms
63
when does a partnership dissolve
a. partner retires b. fixed term expires c. death/bankruptcy of partner d. where continuing becomes unlawful
64
novation agreement
releases partner from existing liability
65
how to release exiting partner from future liability
a. notify all those who you have done business with b. notice in london gazette
66
requirement to allot with 1 class of shares
board resolution
67
requirement to allot with several classes of shares
ordinary resolution which confers authoirty for 5 years
68
how much priority do pre-emption rights give
14 days
69
when may share buyback occur
a. shares fully paid b. paid for out of profits c. authorised by ordinary res note - may be bought with capital if authorised by special res
70
how to approve dividend
ordinary res
71
how to calc trading profits
chargeable receipts LESS deductible expenditure LESS capital allowances
72
writing down allowance
18%
73
start up loss relief (non incorp)
loss suffered in first 4 years of new business set against 3 year prior
74
carry across relief (non incorp)
a. set against current year b. set against preceding year c. set against current then preceding d. set against preceding then current
75
capital gains set off
set losses against capital gains (non incorp)
76
carry forward (non incorp)
loss carried forward until exhausted
77
terminal carryback (non incorp)
loss from final 12 months set against final tax year or 3 years preceding
78
incoporation carry forward
if incorp in return for shares of 80%, losses can be set against income from company
79
proving corporate insolvency
1. creditor serve statutory demand for £750 or more and unpaid after 21 days 2.creditor has obtained judgment and has remained unpaid after enforcement 3. provably failed cash flow or balance sheet test
80
compulsory liquidation
initiated by creditor, fails if company can demonstrate genuine dispute
81
CVL
initiated by company to avoid claims
82
process of liquidation
- directors lose power & terminated - liquidator sells assets
83
avoidance of floating charge
void where granted in relevant time without fresh consideration - connected person 2 years, non-connected 12 months (insolvent at time or as result)
84
preferences
where person put in better position n event of insolvency relevant time: COMPANY & PERSoNAL = connected 2 years, unconnected 6 months desire to prefer presumed for connected
85
transactions at undervalue
where company receives lower consideration relevant time: individual = 5 years company = 2 years insolvency presumed with connected person
86
extortionate credit transaction
made in 3 years prior

SQE2 (10 decks)

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