Chapter 4 - The Members Flashcards

1
Q

What two criteria must be met in order to be a member of a company?

A

Consent to be a member, be entered in the company’s register of members

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2
Q

Other than as a shareholder what other forms can company membership take?

A

Guarantor or for an unlimited company without a share capital some other method of dividing ownership

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3
Q

Is there a minimum or maximum number of members that a company must have?

A

Minimum of 1, no maximum

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4
Q

What are the main disadvantages of registering shares for a long- term investment in children’s names?

A

As minors children can void any obligation to pay funds to the company and a minor cannot deal with any transaction themselves which would require a court order to ensure it was in their interests

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5
Q

Can anyone become a member of a company?

A

Subject to the Articles any natural person or entity with legal capacity may be a member. However subsidiaries are generally prohibited from owning shares in the parent entities

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6
Q

A professional partnership wishes to acquire some shares. How should they be registered?

A

In the name of one or more partners unless it is a Scottish partnership which can register the shares in the partnership name

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7
Q

In order to establish the rights of a shareholder which documents should be referred to?

A

The Articles or any separate terms stipulated at the time of the issue of the shares

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8
Q

Are members always shareholders?

A

No – some members are guarantors

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9
Q

How can a guarantor transfer their membership to someone else?

A

They can’t

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10
Q

Does the guarantee cease immediately on the guarantor resigning?

A

No it remains for one year

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11
Q

Which type of organisation is best suited to use a guarantee company structure?

A

Not for profit

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12
Q

Why is aligning the interests of directors and shareholders difficult to achieve in practice?

A

Shareholders have many different reasons for becoming and remaining as shareholders so their interests are not aligned with each other

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13
Q

What are the main differences between activist and pressure group shareholders?

A

Activist shareholders use their holding and influence to bring about change. Pressure group shareholders try to bring about change through publicity achieved through campaigns and meeting disruption

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14
Q

Rights attaching to shares can be divided into three broad categories, what are they?

A

Rights to vote, rights to distribution of profits and rights to capital

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15
Q

What protection is given to members holding non-voting class shares if the members holding voting shares resolve to amend the Articles in general meeting to increase their dividend rights?

A

Rights attaching to shares of a class cannot be amended without their consent, even if they are non-voting shares

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16
Q

Can a company with two classes of shares, ordinary shares and redeemable shares, purchase back all of the ordinary shares?

A

No

17
Q

What two tests must be satisfied in order to bring a claim for unfair prejudice?

A

The conduct complained of must be unfair and the conduct must have caused or is causing prejudice or harm to the interests of the members or a group of members

18
Q

Can anyone bring a derivative action claim against a company?

A

Must be brought by a member

19
Q

What is the difference between beneficial and legal ownership of shares?

A

Legal ownership is where the person is the registered member, the beneficial owner retains the economic benefit of ownership but is not the legal owner as the shares are registered in a nominee name