Companies Flashcards
What is the key characteristic of a company?
A) It has no legal identity separate from its owners.
B) Shareholders are personally liable for company debts.
C) It is a separate legal entity distinct from its owners.
D) Only public companies have limited liability.
C) It is a separate legal entity distinct from its owners.
Under the Companies Act 2006, what is the minimum number of directors required for a private company?
A) One
B) Two
C) Three
D) Four
A) One (s154 CA 2006)
Which type of company can offer its shares to the public?
A) Private limited company (Ltd)
B) Public limited company (Plc)
C) Private company limited by guarantee
D) Unlimited company
B) Public limited company (Plc)
What is the minimum share capital required for a public limited company (Plc)?
A) £1
B) £10,000
C) £50,000
D) No minimum requirement
C) £50,000 (s763 CA 2006)
James and Sarah start a business together and want to limit their personal liability while raising funds through shares. Which business structure should they choose?
A) Sole trader
B) General partnership
C) Private limited company (Ltd)
D) Unlimited company
C) Private limited company (Ltd)
XYZ Ltd has three shareholders and one director. The company wants to offer shares to the public to raise funds. What must XYZ Ltd do first?
A) Apply for a trading certificate
B) Convert to a public limited company (Plc)
C) Obtain shareholder approval to issue shares
D) List directly on the stock exchange
B) Convert to a public limited company (Plc)
Rachel owns 30% of shares in ABC Ltd. Under CA 2006, what is her legal classification?
A) Director
B) Subscriber
C) Person with Significant Control (PSC)
D) Corporate Member
C) Person with Significant Control (PSC)
(Anyone with more than 25% of shares is a PSC and must be reported to Companies House.)
A private limited company (Ltd) wants to issue shares without holding a general meeting. What allows this?
A) Companies Act 2006 requires a physical meeting.
B) A private company must hold an Annual General Meeting (AGM).
C) Private companies can pass resolutions in writing.
D) Shareholder meetings are required under CA 2006.
C) Private companies can pass resolutions in writing. (CA 2006 simplified rules for private companies.)
A public limited company (Plc) has incorporated but has not yet received its trading certificate. What happens if it starts trading?
A) The company will be fined but can continue operating.
B) The company’s directors will be personally liable for losses.
C) The company will be struck off immediately.
D) The company will have to apply for a new incorporation certificate.
B) The company’s directors will be personally liable for losses. (s761 CA 2006 requires a trading certificate before trading.)
A private limited company (Ltd) has decided to remove its company secretary. What must it do under CA 2006?
A) Appoint a replacement within 30 days.
B) Obtain shareholder approval.
C) Do nothing, as private companies are not required to have a company secretary.
D) File an application at Companies House.
C) Do nothing, as private companies are not required to have a company secretary. (s270(1) CA 2006)
Happy Rags, a growing fashion business, wants to incorporate to protect its owners from business debts. What is the key advantage of incorporation?
A) Full privacy, with no filing requirements
B) No legal formalities to follow
C) Limited liability for shareholders
D) Avoidance of all business taxes
C) Limited liability for shareholders.
