Chapter 18 Flashcards
Who are promoters in relation to setting up companies?
They are the people that go about setting up the company
What another work for incorporation?
Registration
What is a memorandum of association?
Document signed by the company’s initial shareholders which state that they wish to form a company and become members
What must be included in the application for registration?
- Name
- Address of company’s registered office
- Whether unlimited / limited and limited by shares / guarantee
- Whether public / private
- At least one SIC
What must be included in a statement of capital (needed for incorporation)
- Total number and agg’ nominal value of shares
- Name of each share class
- Rights attached to each share & currency
- Total amount unpaid on company’s issues shares
What other documents (other than application for registration & statement of capital) are to be submitted for incorporation?
- Statement of proposed officers - details on director / comp sec’s
- Statement of initial significant control - details of persons with significant control (PSCs)
- Statement of compliance - indicated requirements of the Companies Act 2006 have been met
- The company’s Articles of Association
What extra documents are needed to form a public company?
A statement relating to the trading certificate
Must state: • Nominal amount of shares issued • That at least 25% of nominal value of all share premium has been paid • Amount of any preliminary expenses • Any benefits provided by promoters
At what point does a company have contractual capacity?
After is has been incorporated
Are companies that are incorporated abroad taxed in the UK?
Yes - if they are centrally managed and controlled in the UK
What is a company?
An entity / “vehicle” though which a business can be carried on
What are companies limited by guarantee?
A company that is incorporated the same as other companies but doesn’t have any share capital or shareholders
Members act as guarantors
Still has juristic personality
What they own isn’t called a share - instead a chose in action
What are the minimum amounts of directors, allotted share capital and company secretaries needed for public companies?
Directors - min 2
Allotted Share capital - £50,000 (before it can obtain trading certificate)
Company secretaries - 1
What type of company must have an AGM?
Public company
Can a company limited by shares become a company limited by guarantee?
No!
But most other changes of statuses can happen for companies
What does “Lifting the corporate veil” imply?
That the company is no longer seen as a separate entity
What are the articles of association and what must they include?
Provide detailed written rules governing the running of the company. “internal rule book”
Must include: • The issue of shares • The rights of shareholders • The declaration and payment of dividends • The conduct of meetings • The role & powers of directors
When should articles of association be submitted to companies house?
Only need to be sent if bespoke - otherwise the company will be incorporated with model articles
Can a company alter its articles?
Yes - by a special resolution which will be carried out when 75% of the votes cast at a meeting are in favour of the change
List the rules regarding AGMs for members of a company
- Each shareholder has one vote for each share
- Most shareholder’s decision are passed by a majority vote (unless a change in Articles of Association)
- Company meetings require 14 days notice
- A Public company’s AGM requires at least 21 days notice
- Some types of ordinary resolution require special notice of at least 28 days
- A member can appoint a proxy to attend and vote on their behalf at a meeting
- Members can remove directors when they have concerns over their actions
What are directors knows as under the articles of association?
The company’s agents
Directors take their decisions at board meetings - what are the rules behind board meetings?
- Reasonable notice must be given
- Must be a quorum present (min number needed for a valid meeting)
- Decisions are taken on a majority basis
Minimum age for director?
16
How can directors leave office?
- By shareholders passing an ordinary resolution (with 28 days notice)
- Can be disqualified from acting as a director by court
What are the key duties of directors?
- Act within their powers
- Promote (in good faith) the success of the company
- Exercise independent judgement
- Exercise reasonable care, skill & diligence
- Avoid conflicts of interest
- Not accept benefits from third parties
- Declare an interest in a proposed transact / arrangement
