Chapter 5

Question 1

What is the minimum share capital requirement for Public companies?

Answer 1

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.

Question 2

What is a holding company?

Answer 2

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

Question 3

Why is the classification of a holding company important?

Answer 3

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.

Question 4

LLP elements

Answer 4

Limited Liability Act 2000

LLP is a legal person separate from its members

Formed by incorporation no MOA or articles

At least two members

Question 5

What is an asset lock?

Answer 5

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

Question 6

What is needed to incorporate a company?

Answer 6

Memo of Association

Articles of Association

Form IN01

Fee

Question 7

Public Company - what does it need before it can start trading after incorporation?

Answer 7

Trading certificate s761-762

statutory declaration that it has allotted shares to a value of at least £50,000 and a quarter paid.

Question 8

what are the 5 statutory registers?

Answer 8

Register of members
Register of Directors
register of Secretaries
Register of PSCs (Persons with significant control
Register of interests in voting shares (if public)

Question 9

When can a Public Company be made to change to a Private Company

Answer 9

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.

Question 10

Requirements re-registration Private to public co

Answer 10

1. special resolution
2. 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

Question 11

Requirements Public to Private

Answer 11

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

Question 12

When can the Sec of State order change of a company Name?

Answer 12

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

Question 13

What do the Listing Rules expect in terms of the Corporate Governance code?

Answer 13

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.

Question 14

what are the three guidance’s to assist the application of the Governance Code Principles?

Answer 14

Guidance on Board effectiveness
Guidance on Audit Committees
Guidance on risk management, Internal Control and Business reporting

Question 15

What are the 5 parts of the Corporate Governance Code 2018

Answer 15

B D CSE ARI R

Board Leadership (Do)

Division of Responsibility (who_

Composition, succession and Evaluation

Audit, R and Internal Control

Remuneration

Question 16

Principle A

Answer 16

To promote the long term sustainable success of the Company

To generate value for shareholders and contribute to wider society

enlightened shareholder approach

Question 17

UK Stewardship Code - what is it?

Answer 17

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

Question 18

What
six methods of dissolution

Answer 18

Striking off the register

cancellation of registration for illegal purpose

Compromise or arrangement

Takeovers

Administration order under Insolvency Act

winding up after Insolvency

Question 19

What is striking off the register?

Answer 19

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!

Question 20

What is s110 Insolvency Act - when is it used?

Answer 20

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

Question 21

what is s899 CA for

Answer 21

If 75% of creditors (value) or 75% or members agree to a compromise or arrangement application may be made to the court to facilitate.

Question 22

What are the 6 general principes of the Takeover code

Answer 22

1. All shareholders must be treated equally
2. The shareholders must be given sufficent time to make informed decisions
3. The board of the offeree company must act in teh best interests of the company
4. 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

Question 23

What is a squeeze out? s979

Answer 23

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.

Question 24

What is a sell out?

Answer 24

s983 The holder of shares who has not accepted the take over offer may require the offeror to aquire those shares.

Question 25

what is a mandatory bid?

Answer 25

When a person gains 30% control (holds 30% voting shares) he must make a takeover bid for all of the voting shares.

Question 26

What is an Administration order

Answer 26

An order of the court to appoint an administrator to rescue and rehabilitate the company as a going concern or to realize assets at the best possible value.

Question 27

Administration order - what are the three choices under the Enterprise Act 2002

Answer 27

a. rescuing the company as a going concern
b. Achieving a better result for the companys creditors as a whole than would happen if wound up
c. realising property in order to make a distribution to secured or preferential creditors.

Question 28

What are the methods of winding up?

Answer 28

Voluntary winding up

Winding up by the court