Chapter 5 Flashcards
What is the minimum share capital requirement for Public companies?
s763 £50,000
s568 Company may not allot a share as partly paid unless a quarter payment plus any premium has been received.
£12500 in total paid up.
What is a holding company?
Holds majority of voting rights
Has right to appoint or remove majority of Board
controls alone the majority of voting rights with agreements from other shareholders
Note - A subsidiary cannot be a member of its holding company s23
Why is the classification of a holding company important?
Has to publish group accounts
May help in purchase of shares in its subsidiary
Increase in limited liability afforded to group as a whole. Principle that one group company is not responsible for the liabilities of another and may be a secured creditors taking priority over external creditors in an insolent liquidation.
LLP elements
Limited Liability Act 2000
LLP is a legal person separate from its members
Formed by incorporation no MOA or articles
At least two members
What is an asset lock?
a CIC (community Interest Company) shares the characteristics of a standard company but has a capital lock
The assets cannot be disposed of without the consent of the registrar as they are connected with activities beneficial to the community.
Prevents asset stripping giving confidence to councils / charities etc. to provide goods
What is needed to incorporate a company?
Memo of Association
Articles of Association
Form IN01
Fee
Public Company - what does it need before it can start trading after incorporation?
Trading certificate s761-762
statutory declaration that it has allotted shares to a value of at least £50,000 and a quarter paid.
what are the 5 statutory registers?
Register of members
Register of Directors
register of Secretaries
Register of PSCs (Persons with significant control
Register of interests in voting shares (if public)
When can a Public Company be made to change to a Private Company
If there is a serious loss of capital.
s656, 662,664
Directors must convene an EGM if net assets less than half of its called up share capital
Members decide at meeting whether to liquidate or carry on but must change to a private co.
Requirements re-registration Private to public co
- special resolution
- submission of documents to registrar
Proposed name
Proposed CoSec name
copy of Special resolution
copy of articles
copy of balance sheet and unqualified auditors report
valuation report on any recent allotment of shares
statement of compliance
Requirements Public to Private
Special resolution
No application to court to cancel resolution
submission of documents to registrar
proposed name
copy of special resolution
copy of articles
statement of compliance
When can the Sec of State order change of a company Name?
WIthin 12m if too like an existing name
within 5 years if misleading info on registration
Any time if name misleads or causes harm to the public
What do the Listing Rules expect in terms of the Corporate Governance code?
The Listing rules require companies to make a statement of how they have applied the principles this should be accompanied by high quality reporting on the provisions.
what are the three guidance’s to assist the application of the Governance Code Principles?
Guidance on Board effectiveness
Guidance on Audit Committees
Guidance on risk management, Internal Control and Business reporting
What are the 5 parts of the Corporate Governance Code 2018
B D CSE ARI R
Board Leadership (Do)
Division of Responsibility (who_
Composition, succession and Evaluation
Audit, R and Internal Control
Remuneration
Principle A
To promote the long term sustainable success of the Company
To generate value for shareholders and contribute to wider society
enlightened shareholder approach
UK Stewardship Code - what is it?
A set of apply and explain principles for asset managers and asset owners
Indicate information that should be in a stewardship report
Principles:
Purpose and governance
Investment approach
engagement
exercising rights and responsibilites
What
six methods of dissolution
Striking off the register
cancellation of registration for illegal purpose
Compromise or arrangement
Takeovers
Administration order under Insolvency Act
winding up after Insolvency
What is striking off the register?
Common as cheap and easy
s1000 CA registrar can send letter to co. it believes is not carrying on business
No response after 1 month sends follow up letter
No response after follow up letter after 1 month
No response notice with view to striking off published in the Gazette.
Two months for interested parties to contact the registrar
Then struck off and disolved
Property belonging to company is bona vacantia
Parties can dissolve by doing nothing!
What is s110 Insolvency Act - when is it used?
Only applies during a voluntary liquidation
Involves the sale of the undertaking for shares in another company]]Does not require liquidator to go to court for approval unless a creditors winding up
Useful for obtaining mergers where boards of teh companies are willing for the merger to take place
If opposition then s899 CA is better
what is s899 CA for
If 75% of creditors (value) or 75% or members agree to a compromise or arrangement application may be made to the court to facilitate.
What are the 6 general principes of the Takeover code
- All shareholders must be treated equally
- The shareholders must be given sufficent time to make informed decisions
- The board of the offeree company must act in teh best interests of the company
- An offereor must announce they have sufficnet cash for a cash bid
An offeree company must not be hindered in the conduct of its affairs longer than is necessary
What is a squeeze out? s979
If the offeror has aquired 90% in value of shares he may give notice to the holder of any shares that he wishes to aquire them.
What is a sell out?
s983 The holder of shares who has not accepted the take over offer may require the offeror to aquire those shares.
