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Company Compliance and Administration > Chapter 5: Company Compliance > Flashcards

Chapter 5: Company Compliance Flashcards

1
Q

What types of company can be incorporated?

A
  1. Ltd by shares
  2. Ltd by guarantee
  3. Plc
  4. Unlimited private company
  5. Right to Manage companies
  6. Community Interest Companies
  7. Charities Act companies
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2
Q

What are the factors to consider when choosing a company type on incorporation?

A

· Charity or not
· Profitable/Not for profit
· Multiple public members, or private members only
· Liability of members (e.g. if limited by guarantee,
or if limited or unlimited)
· Tax
· Confidentiality of financial information

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3
Q

What documents need to be sent to Companies House to incorporate a company?

A
  • Memorandum
  • Articles of Association
  • IN01 form
  • Fee
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4
Q

What are the sensitive words and expressions for a Company Name requiring Secretary of State’s approval?

A 
·	British
·	International
·	Royal
·	Insurance
·	Accounting
·	Implying a connection to a council/local authority 
·	Where use could constitute an offence
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5
Q

What companies can be re-registered as a different type?

A

· Private to public (unless registered as unlimited –
s.90)
· Public to private (s.97)
· Private Ltd to Unlimited (unless previously re-
registered as limited – s.102)
· Unlimited to limited (unless previously re-
registered as unlimited – s.105)
· Public to unlimited (unless previously re-registered
as limited/unlimited – s.109)

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6
Q

What companies cannot be re-registered as a different type?

A

· CICs cannot be changed

· To or from a Ltd by guarantee

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7
Q

When can CH reject a filing?

A

· Illegible (glossy paper, images, if too high res etc)
· Not signed
· Incorrectly completed
· Late

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8
Q

What is the difference between WebFiling and Software filing?

A

WEBFILING
Authentication code required
Cheaper

SOFTWARE FILING
Authentication code required
Like Diligent Entities / PCSec
Costly
Extra checking pre-sending to companies house
Bulk filings (i.e. Confirmation Statements)

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9
Q

What are criminal offences under CA2006

A

· Failing to file accounts on time (s.451)
· Failing to enter/update director details (s.162)
· Failing to send Articles after resolution (s.26)
· Failing to respond to request to confirm company
details on central register (s. 128F)
· Failing to show registered office and number on
emails (Companies, LLP and Business Names
(Trading Disclosures) Regulations) 2015

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10
Q

When is the company liable, rather than the officer? (pg. 106 bottom)

A

If theres no victim eternal to the company from the breach, then it’s the officer that is liable. If there is an external 3rd party victim, it is the companies fault.
A liable officer is defined by s.1121 as ‘every person treated as an officer for purposes of a particular provision’.

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11
Q

What is the deadline for bringing summary proceedings against a company/liable officer?

A

Within period of 3 years of offence, and within 12 months of evidence (s.1128)

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12
Q

What are the 5 sections of UKCGC?

A
  1. Board Leadership and Company Purpose
  2. Division of Responsibilities
  3. Composition, Succession and Evaluation
  4. Audit, Risk and Internal Control
  5. Remuneration
    Anagram - [BaD CAR]
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13
Q

What is an institutional investor?

A

An organisation institution that invests funds on behalf of clients, savers or depositors. I.e. funds, pension funds
A retail investor will buy shares themselves. More direct.

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14
Q

What are the 7 main principles of UK Stewardship Code?

A
  1. Discharge stewardship responsibilities policy
  2. Managing conflicts of interest policy
  3. Monitor investee companies
  4. Protect and enhance shareholder value
  5. Act collectively with other investors
  6. Voting policy
  7. Report on voting and stewardship
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15
Q

What policies help to ‘set the tone from the top’?

A
  1. Diversity & discrimination
  2. Whistleblowing
  3. Remuneration
  4. Employment handbook (smaller companies???)
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16
Q

What is a merger?

A

Where a company merges with another company / is taken over by another company. Only applies to plc.

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17
Q

What are the two types of merger?

A

By absorption: One or more plc companies transferred to existing plc.

By formation: Two or more plcs to be transferred to a newly incorporated company (which can be either public or private)

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18
Q

How are mergers actioned?

A

Checklist – Mergers (not highlighted in the textbook)
ONLY APPLIES TO PLCS
· Documents listed in s. 905, 908-911 made available for at least 1 month prior to member/class meetings
· Notice given to registrar of draft merger agreement for publishing on the Gazette
· Member/class approve the transaction by special resolution of 75%
· Directors must report changes to liabilities and property of the company to both members, and the directors of the other companies, any involvement

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19
Q

What is a division?

A

Where the assets, property, liabilities etc are being divided up and sold on to various other companies. Only applies to plc.

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20
Q

What are the two types of division?

A

Existing company: If a plc wants to acquire parts of a company being divided, then they can.

New company: If a Ltd wants to acquire parts of a company being divided, then it needs to either incorporate a new Plc or new Ltd.

21
Q

How are divisions actioned?

A

Checklist – Divisions (not highlighted in the textbook)
ONLY APPLIES TO PLCS
· Documents listed in s. 920-925 made available for at least 1 month prior to member/class meetings
· Member/class approve the transaction by special resolution of 75% (s.922)
· Directors must report changes to liabilities and property of the company to both members, and the directors of the other companies, any involvement

22
Q

When would a scheme of arrangement be useful?

A

100% is desired, but nature of business stops the 90% level needed for compulsory acquisition.

23
Q

How are Schemes of Arrangement/Compromise actioned?

A

Checklist – Schemes of Arrangement/Compromise (not highlighted in the textbook)
· Hold meetings to approve scheme
· If court is assisting, apply to court setting out
nature of proposed transaction
· Detailed information on content of notice for
meetings will be provided by the court
· Accompanying statement outlining effects of the
compromise agreement and any effect on the
material interests of the director
· Contents must be approved before circulation
· Meeting takes place, managed by
Directors/CoSec like any other GM
· Report of meeting/votes cast submitted to court
· 75% approval needed

24
Q

What are the 4 main types of Takeover?

A

Share sale agreement, Public purchase, Takeover offer, Scheme of arrangement or compromise.

25
Q

What is a share sale agreement?

A

Agreement between the offeror/acquirer company and the shareholders of the offeree/target company (agreements with individual members).
This is the usual type of takeover for private companies (due to small numbers of shareholders usually – not practicable for larger public companies)

26
Q

What is public purchaser?

A

Offeror/acquirer purchases blocks of shares in a company to then launch a bid for the remainder of issued capital.
This is the usual type of takeover for public companies

27
Q

What is Takeover offer?

A

Where an offeror/acquirer makes a public offer to the shareholders to buy their shares on stated terms.

28
Q

What is a Scheme of arrangement or compromise?

A

Refer to above section and checklist

Where 75% of members approve a scheme proposed to them by the offeror/acquirer

29
Q

What is the ‘The City Code on Takeovers and Mergers’ and the Takeover Panel?

A

The takeover panel ensures fairness in any takeover proceedings. The City Code is drafted by the Takeover Panel and sets out rules for takeovers to follow.

30
Q

What is a Squeeze out?

A

Acquiror buys 90% of the shares, and then gets the right to compulsorily acquire the remaining 10% shares of the minority shareholders (like what happened to Alan and his Cadbury/Kraft shares).

31
Q

Define a Sell out

A

If 90% has been acquired, then notice is given to shareholders, giving them the right to be bought out on the same terms as the offer.

32
Q

What is a Concert party?

Rule 9 of City Code

A

A group of shareholders working together to make a takeover offer if the total % is 30% or more.
Once 30% is reached they have to make a mandatory offer.
Shareholders need to be careful not to form a concert party.

33
Q

What are the 3 types of winding up?

A

Members voluntary, Creditors voluntary, Court

34
Q

Describe a Members voluntary winding up

A

Only solvent companies
Solvency statement must be passed first
Sanctioned by special resolution

35
Q

Describe a Creditors voluntary winding up

A 
Solvent or (mostly) Insolvent
If solvent, a solvency statement must be passed first
Sanctioned by the court (insolvent) or liquidation committee (solvent).
36
Q

Describe a winding up by the Court

A

The court actions the voluntary winding up as per above
The court can action a wind up on its own if:
- Just and equitable
- Judgement creditor has petitioned (£750+)
- If fails to comply with statutory requirements (i.e. no trading cert if plc, or not enough members)

37
Q

What is the role of a liquidator?

A

Once a liquidator is appointed, they take control of the business. Responsible for the assets of the company on winding up. They have a duty to protect a company’s assets to ensure they can be sold on to get money back to the creditors.

38
Q

What conduct by directors of a company being wound up is deemed unacceptable?

A
  • If they get in the way of the liquidator
  • If they withhold information from the liquidator
  • Unfit for service in an insolvent company (CDDA 1986)
  • Can’t be appointed a director of a phoenix companies (i.e. similarly named company)
39
Q

What is the role of a liquidator?

A

Once a liquidator is appointed, they take control of the business. Responsible for the assets of the company on winding up. They have a duty to protect a company’s assets to ensure they can be sold on to get money back to the creditors.

40
Q

What conduct by directors of a company being wound up is deemed unacceptable?

A
  • If they get in the way of the liquidator
  • If they withhold information from the liquidator
  • Unfit for service in an insolvent company (CDDA 1986)
  • Can’t be appointed a director of a phoenix companies (i.e. similarly named company)
41
Q

Why would CH try to strike of a company?

A
  • Failed to file accounts/confirmation statement
  • Think the company is defunct
  • No response to letters sent to registered office
42
Q

How can a private company be voluntarily struck off?

A

If they’re not trading, make a voluntary application (DS01). Can be stopped by filing a DS02.

43
Q

What is the most common cause of a dissolution being stopped?

A

From HMRC if they suspect unpaid taxes.

44
Q

What is bona vacantia?

A

Means ‘vacant goods’. These are ownerless assets, which then pass to the crown if the company has been dissolved.

45
Q

Why would a company restored?

A
  • If later discovered that a company did hold assets, it can be restored to deal with those assets.
  • Purpose of brining proceedings against a company for personal injury.
46
Q

Who can apply to have a company restored?

A
  • Director
  • Members
  • Secretary of State if justified in the public interest
47
Q

What is the deadline for restoring a company before it is no longer possible?

A

Within 6 years of date of dissolution (s.1024)

48
Q

What are the two types of restoration?

A

Administrative Restoration: Actioned by applying to Companies House

Court Order: Actioned by the court if Companies House has declined the Administrative Restoration

49
Q

What is the definition of a Dormant Company under s. 1169, and what transactions are disregarded?

A

No significant accounting transactions since end of previous financial year, or since incorporation. Significant accounting transactions disregarded include:

  • Payment for shares on subscribing to the memorandum
  • Fees to registrar
  • Civil penalties (i.e. late filing)

Company Compliance and Administration (5 decks)

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