busioness law and practice flash cards

Question 1

what is an ordinary resolution?

Answer 1

A part of the decision-making within a company. There must be a majority (more than 50%) of shareholders or directors to agree or disagree on a decision.

Question 2

in what circumstances will a company pass a special resolution?

Answer 2

changing articles of association (AOA) or the company name

Question 3

in what circumstances can shareholders allot shares?

Answer 3

they don’t - it’s directors who allot shares

Question 4

in what circumstances can a shareholder declare a dividend?

Answer 4

they don’t, its the directors who declare a company divident.

Question 5

what is a Quorum

Answer 5

The minimum number of directors or shareholders who are eligible to vote must be in attendance at a meeting

Question 6

why is it necessary for a company meeting to be Quorate?

Answer 6

if a meeting is not quorate, then any business transacted will be Void.
The AoA stipulate the numbers required for quorate generally it is a mimum of 2.

Question 7

in what circumstances will a director be prevented from the Quorum of a Business Meeting?

Answer 7

If the director has a conflict of interest with an item on the adgenda they cannot add to the quorate.
Also the director will not be able to vote on the item that brings the director into conflict.

Question 8

at what Company meeting can a director be appointed ?

Answer 8

Board Meeting

Question 9

whi makes decisions for issuing new shares?

Answer 9

Directors will propose this at a Board Meeting - if the class of shares is not set out in the AOA, then the shareholders will vote at a GM to alter the AOA.

Question 10

what is the minimum number of directors a company can have under the CA 2006?

Answer 10

1

Question 11

why do companies need to have seperate BM and GM minutes?

Answer 11

These reflect two independent meetings and require a record of each separate meeting that takes place

Question 12

when must company minutes be filed at companies house?

Answer 12

minutes are NEVER filed at companies house
they are kept at the companies registered office for a period of 10 years

Question 13

in what circumstances do shareholders approve a directors service contract ?

Answer 13

if any director is offered a service contract for more than two years, shareholders must approve at a GM. or Vote by Ordinary resolution.

Question 14

what is the rationale for shareholders approving a director’s service contract?

Answer 14

This allows shareholders some control over appointments

For example if company directors handed out lucrative offers to their friends for 10 years, the company could be ‘stuck’ with them. If this director proved to be incompetent, the problem is compounded. The company may be forced to buy out the term of the service contract if they wish to ‘get rid’ of the director. Also remember a service contract gives employment rights, and so unfair or constructive dismissal could be claimed.

Question 15

can shareholders attend a Board Meeting ?

Answer 15

YES

Question 16

how is the company secretary recorded in the BM minutes?

Answer 16

in attendance

Question 17

17. What is the difference between in attendance and present at company meetings?

Answer 17

Everyone present has a right to vote those in attendance do not.

Question 18

If a set of company minutes reflect a meeting has been adjorned what does this signify?

Answer 18

When a meeting is adjourned this is noted in the minutes and indicates that not all business has been concluded, the meeting will be recovened at a later stage.

Question 19

what does it mean if a meeting has been closed

Answer 19

If the meeting has been closed this indicates all business has been concluded and will not reconvene.

Question 20

who is responsible for filing documents at companies house?

Answer 20

company secutary

Question 21

what is the notice period for a GM and in what circumstances can this be altered?

Answer 21

14 days for a general meeting. this can be reduced by short notice providing 90% of members agree to this.

Question 22

in what circumstances will the chairperson at a company meeting have the casting vote?

Answer 22

when the voting is tied. however, the AOA should indicate that the casting vote is given to the chair person.

Question 23

what registers can be found at companies registered office?

Answer 23

Directors register, members(shareholder) register and charges register

Question 24

ewhat document must b logged at companies house for a new director, a new shareholder?

Answer 24

AP01 & SH01

Question 25

if special resolution is voted on to remove a company director, what % is required?

Answer 25

None. a company director is removed by ORDINARY RESOLUTION.

Question 26

If a company uses the written resolution procedure how many days will be allowed to pass the vote?

Answer 26

28 days

Question 27

what happens if this time runs out?

Answer 27

after the 28 day period it expires and the process must start again.

Question 28

can a company director be removed by written resolution?

Answer 28

No.
A company director must be given the opportunity to attend a physical meeting (BM) and defend their position or answer any claims being made against them.

Question 29

what are pre-emption rights when issuing shares?

Answer 29

pre-emption rights give existing shareholders the rights of first option to buy when shares are being issued.

Question 30

what is a floating charge?

Answer 30

a form of borrowing.

A floating charge secures itself over a variety of company assets which are not necessarily fixed they can be movable in nature.

Question 31

what if anything can a floating charge attach itself to?

Answer 31

Property, Stock, Goodwill, “monies in” plant or machinery etc.

Question 32

in what circumstances will a floating charge catalyse?

Answer 32

If the terms under the floating charge are not met and there is a default then the floating charge will be fixed an attach itself to the company’s assets