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Company Law > companies act & partnership act > Flashcards

companies act & partnership act Flashcards

1
Q

In the companies act 2006 what section deals with directors?

A

The Companies Act 2006 outlines the duties of directors in Section 171 to Section 177.

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2
Q

In the companies act 2006 what section deals with auditors?

A

he duties of auditors are primarily laid out in Section 495 to Section 507 of the Companies Act 2006.

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3
Q

What does Section 31 of the Companies Act 2006 state
regarding the objects of a company?

A

Section 31 of the Companies Act 2006 states:

General Capacity: A company’s objects are unrestricted unless specifically stated otherwise in its articles of association.

No Requirement to Specify Objects: Companies are not required to define their objects in their articles, allowing them to operate freely in any lawful business activity.

Restriction via Articles: If a company chooses to include an objects clause in its articles, it must adhere to those stated restrictions.

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4
Q

What does Section 113 of the Companies Act 2006 state
regarding the register of a company’s members?

A

Section 113 of the Companies Act 2006 states the following regarding the register of a company’s members:

Requirement to Maintain a Register: Every company must keep a register of its members.

Contents of the Register: The register must include:
Names and addresses of the members.
The date on which each person became a member.
The date on which any person ceased to be a member.

Location: The register must be kept at the company’s registered office or another specified location notified to Companies House.

Inspection: The register must be available for inspection by members of the company and the public, subject to certain conditions.

Penalty for Non-Compliance: Failure to maintain the register can result in fines for the company and its officers.

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5
Q

What is laid out in the Companies act 2006, section 498?

A

The Companies Act 2006, Section 498, outlines an auditor’s duties as ensuring company accounts are free from material misstatements, reporting on the accounts’ accuracy and compliance with legal requirements, and providing an independent opinion on the financial statements.

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6
Q

What act and section lays out the rights of the auditor?

A

The Companies Act 2006, Section 499, outlines an auditor’s rights, including the right to access company records, receive information from directors, and attend general meetings to speak on matters related to the audit.

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7
Q

What act and section covers the auditors report?

A

The Companies Act 2006, Section 495, requires the auditor’s report to state whether the financial statements give a true and fair view, comply with applicable laws, and include any necessary disclosures. It must also highlight any material uncertainties related to going concern.

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8
Q

Companies Act 2006 section 173 talks about what?

A

The Companies Act 2006, Section 173, outlines the duties of directors in relation to their decision-making. It requires directors to exercise their powers in good faith, in the best interests of the company, and with reasonable care, skill, and diligence.

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9
Q

Companies Act 2006 section 393 talks about what?

A

CA 2006 s 393: Accounts to give a true and fair view

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10
Q

Companies Act 2006 section 172 talks about what?

A

Section 172 of the Companies Act 2006 outlines the duty of directors to promote the success of the company for the benefit of its members. Directors must consider factors such as long-term success, employee interests, relationships with suppliers and customers, impact on the community and environment, and the need to maintain a reputation for high standards of business conduct.

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11
Q

What is the Partnership Act 1890?

A

Partnership Act 1890:

Still the legislation governing the definition and behaviour of general partnerships.

Defines a partnership (known as “the firm”) as “the relationship which subsists between persons carrying on a business in common with a view to profit”

If no partnership agreement exists (or the agreement doesn’t cover that particular issue) then the rules stated in PA 1890 will apply

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12
Q

Partnership Act 1890 Section 5?

A

Partnership Act 1890 Section 5: Every partner is an agent of the firm and all the co-partners.

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13
Q

Partnership Act 1890 Section 28?

A

PA1890 s28: Duty to render accounts

Partners must provide true accounts and full information on all things affecting the partnership, to all the other partners or their legal representative

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14
Q

PA1890 s29?

A

PA1890 s29: accountability of partners for private profits

Partners must account to the firm for any benefit obtained without consent from any transaction concerning the partnership

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15
Q

PA1890 s30?

A

PA1890 s30: Duty not to compete

Where a partner competes with partnership business without the consent of the other partners.

That partner is liable to account to the partnership for any profits made in the course of the competing business

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16
Q

Companies act 2006 – section 870?

A

Companies act 2006 – section 870: A charge must be registered within 21 days of its creation
https://www.legislation.gov.uk/ukpga/2006/46/section/870
The registrar will then issue a certification of registration, including details of its particulars (CA 2006, s 869)
https://www.legislation.gov.uk/ukpga/2006/46/section/869

If a charge is not registered, it will be invalid

17
Q

what act are the saftey measures to protect comapnys from directors misuing thier powers?

A

Safety measures to protect the company from directors misusing their powers

Now codified in Companies Act 2006, s 171-177

Were previously found in common law rules

Most of these related to fiduciary duties i.e. those relating to trust and confidence

18
Q

what is section companies act section 171?

A

companies act section 171 – A duty to act within powers

Directors must act in accordance with company constitution

Must only exercise their powers for the purpose they were given

Transactions can be approved (or ratified) by the shareholders in a GM, even after it has occurred

19
Q

what is section companies act section 172?

A

companies act section 172: A duty to promote the success of the company

Directors must act in good faith and in the company’s best interests

Director needs to consider what is best for the company (and its members) as a whole

May involve subjective decisions e.g. short-term profit v long-term potential

20
Q

what is section companies act section 173?

A

companies act section 173: A duty to exercise independent judgement

Directors need to exercise their own judgment, and not merely rely on instruction from others

When a parent company acts as a shadow director, it is important that the directors still consider what is in the best interests of the company

21
Q

what is section companies act section 174?

A

companies act section 174: A duty to exercise reasonable skill, care and diligence

This duty has an objective and subjective test

Objective part – Test based on how a reasonable director would have acted

Subjective part – Test based on how that particular director would have acted based on their actual knowledge, skill & expertise

22
Q

what is section companies act section 175?

A

section companies act section 175: A duty to avoid conflict of interest

A director must avoid a situation which they have an interest that may conflict with the interests of the company

The conflict may be unavoidable

In which case, appropriate safeguards need to be taken (with a full paper trail)

23
Q

what is section companies act section 176?

A

companies act section 176: A duty not to accept benefits from third parties

Benefits can be financial or non-financial

Include bribes and gifts
Director must not accept benefits arising from their position as director, or for them to do (or not do) an act as director

Larger companies usually have strict rules regarding acceptance of gifts

24
Q

what is section companies act section 177?

A

what is section companies act section 177: A duty to declare an interest in any proposed transaction or arrangement with the company

Where the company are proposing a course of action, directors must disclose any interest (direct or indirect) they have in this action

For example, if the company plan to enter into a contract with another business, which is run by the director’s partner

25
Q

what act covers the disqualification of directors?

A

Covered in The Company Directors Disqualification Act 1986

The act allows a court to disqualify any person from being a director (and certain other roles)

Prevents failed directors from creating new companies without incurring personal liability

26
Q

Companies Act 2006, section 393?

A

Companies Act 2006, section 393:

An auditor of a company:
has a right of access at all times to the company’s books, accounts and vouchers (in whatever form they are held), and

may require any of the following persons to provide him with such information or explanations as he thinks necessary for the performance of his duties as auditor.

It is a criminal offence to knowingly or recklessly give an auditor misleading, false or deceptive information

felix dennis hav ing to carry in three large satchels of him and his mates in the baord room.

27
Q

What does section 28-30 of Partnership Act 1890 describe?

A

Section 28: Duty to Render Accounts
Partners must provide true accounts and full information about the partnership to other partners.

Section 29: Accountability for Private Profits
A partner must disclose and repay any personal profits made from partnership business or property without consent.

Section 30: Duty Not to Compete
A partner must not compete with the partnership business. If they do, they must disclose and repay any profits made.

28
Q

What information is contained on a company’s certificate of
incorporation?

A

A company’s certificate of incorporation contains the following key information:

1) Company Name: The legal name of the company as registered.
2) Company Registration Number (CRN): A unique identifier assigned to the company.
3) Date of Incorporation: The date the company was officially registered.
4) Company Type: Whether the company is a private limited company, public limited company, etc.
5) Registered Office Address: The official address of the company.
6) Country of Registration: The jurisdiction in which the company is incorporated (e.g., England and Wales, Scotland).
7) Authority of Registration: The registrar or governing body issuing the certificate (e.g., Companies House in the UK).
8) Confirmation of Incorporation: A statement certifying that the company has been incorporated under the applicable laws.

29
Q

What information would normally be included in a partnership
agreement? (5 things)

A

A partnership agreement normally includes:

1) Business Name and Purpose: The partnership’s name and what it does.
2)Partners’ Contributions: Details of capital or assets contributed by each partner.
3)Profit and Loss Sharing: How profits and losses will be divided.
4)Roles and Responsibilities: Management duties and decision-making authority.
5)Dissolution Terms: Procedures for ending the partnership or handling partner exits.

30
Q

how to remeber section 171 to 177?

A

“Act Professionally, Independently, Carefully, Avoiding Benefits and Declaring Interests.”

Breakdown:
Act = 171: Duty to Act within powers.
(Follow the company’s constitution and act for the right reasons.)

Professionally = 172: Duty to Promote the success of the company.
(Work in the best interest of the company and its members.)

Independently = 173: Duty to exercise Independent judgment.
(Make your own decisions, not just follow others.)

Carefully = 174: Duty to exercise Care, skill, and diligence.
(Act with competence and due care.)

Avoiding = 175: Duty to Avoid conflicts of interest.
(Don’t let personal interests clash with the company’s.)

Benefits = 176: Duty not to accept Benefits from third parties.
(Refuse benefits that could compromise your role.)

Declaring Interests = 177: Duty to Declare interests in transactions.
(Disclose any personal stake in company dealings.)

31
Q

what is this section? how to remeber section 495 to 502?

A

its baout auditors. Acronym to Remember: AWAREFUL

A: Appointment of auditors (495)
W: Auditor’s Written report (496)
A: Affairs in voluntary winding up (497)
R: Auditor’s Responsibility to inquire (498)
E: Auditor’s Examination rights t oinformation (499)
F: Final report during winding up (500)
U: Offense of Underhanded account falsification (501)
L: Auditor’s Liquidation powers (502)

32
Q

acronym to remeber What section 28-30 of Partnership Act 1890 describes?

A

RAC

Render Accounts (Duty to Render Accounts)
Accountability for Profits (Accountability for Private Profits)
Competition (Duty Not to Compete)

33
Q

what sections covers the duties of an auditor?

A

Duties of Auditors
Section 496: Auditor’s report on accounts of private company.
(Duty to prepare a report on whether the accounts comply with the Companies Act and provide a true and fair view.)

Section 497: Auditor’s report on accounts of quoted company.
(Duty to report specifically on the accounts of quoted companies.)

Section 498: Auditor’s duties in relation to the audit.
(Duty to investigate whether adequate accounting records have been kept and whether the accounts agree with those records.)

Section 501: Offense of knowingly or recklessly causing an auditor’s report to include misleading, false, or deceptive statements.
(Duty to ensure accuracy and avoid deception in reports.)

34
Q

what sections covers the rights of an auditor?

A

Rights of Auditors
Section 499: Rights of auditors in relation to information.
(Right to access company books, accounts, and vouchers, and to require information from officers of the company.)

Section 500: Auditor’s general right to information.
(Right to obtain all necessary information for the audit from the company.)

Section 502: Auditor’s rights in relation to resolutions and meetings.
(Right to receive notice of and attend company meetings where accounts are discussed.)

35
Q

what is the declaration of solvency?

A
  • Declaration of solvency
  • This document states that:
  • The directors have made a full enquiry into the affairs of the company, and…
  • Have formed the opinion that the company will be able to pay its debts in full within a period of not more than 12 months from the date on which the winding up or liquidation commences
  • A director who makes a declaration of solvency without reasonable ground is committing a criminal offence
36
Q

How to remember section 495 to 502?

A

AWAREFUL Breakdown (Corrected):

  1. A - Auditor’s Report (s495)

The auditor’s report must state whether the accounts give a true and fair view.

  1. W - Whether There Are Misstatements (s496)

The report must state whether there are any material misstatements.

  1. A - Accounting Standards (s497)

The report must confirm whether it complies with accounting standards, including FCA standards.

  1. R - Right to Investigate (s498)

Auditors have a duty to investigate and ensure proper information is provided.

  1. E - Entitlement to Information (s499)

Auditors have a right to access information necessary for their duties.

  1. F - Foreign Subsidiaries (s500)

Auditors have the right to information from overseas subsidiaries.

  1. U - Unlawful Acts (s501)

It is illegal to mislead an auditor, punishable by a fine or up to 2 years of imprisonment.

  1. L - Legal Rights in Resolutions (s502)

Auditors have specific rights regarding resolutions and must be notified of them.

37
Q

How to remember section 495 to 502?

A

AWAREFUL Breakdown (Corrected):

  1. A - Auditor’s Report (s495)

The auditor’s report must state whether the accounts give a true and fair view.

  1. W - Whether There Are Misstatements (s496)

The report must state whether there are any material misstatements.

  1. A - Accounting Standards (s497)

The report must confirm whether it complies with accounting standards, including FCA standards.

  1. R - Right to Investigate (s498)

Auditors have a duty to investigate and ensure proper information is provided.

  1. E - Entitlement to Information (s499)

Auditors have a right to access information necessary for their duties.

  1. F - Foreign Subsidiaries (s500)

Auditors have the right to information from overseas subsidiaries.

  1. U - Unlawful Acts (s501)

It is illegal to mislead an auditor, punishable by a fine or up to 2 years of imprisonment.

  1. L - Legal Rights in Resolutions (s502)

Auditors have specific rights regarding resolutions and must be notified of them.

Company Law (12 decks)

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