Company

Question 1

Which are the decisions that need Special Resolution

Answer 1

Making private company public (**will then need new certificate of incorporation but not a trading certificate)

Changing company name

Changing/amending company’s articles

Disapplying pre-emption rights (issue shares)

Allow payment out of capital

Question 2

Administrative procedure of Special Resolution

Answer 2

Need to be filed at CH within 15 days

Question 3

Administrative procedure of accepting new director

Answer 3

Need to file form within 14 days of acceptance

Question 4

What happens if a GM is called via email?

Answer 4

48hrs is added to the 14 clear days notice

Question 5

When should a charge be registered

Answer 5

Within 21 days of creation

Question 6

Procedure of share transfer

Answer 6

Must complete a sign share transfer form + give share certificate

Transferee must send stock and certificate to company
- new share certificate issued within 2m
- need to enter name of member on register within 2m (and possibly alter PSC register)
- notify Registrar of Companies on annual confirmation statement

Question 7

Procedure for share buy back

Answer 7

1- need to make sure it is not prohibited by articles.
2- shares should be fully paid at the time of purchase and should be paid out of DISTRIBUTABLE PROFITS
3- requires an ORDINARY resolution
4- copy of buy back contract/summary should be made available 15 days before GM and at GM (or sent w written res)
5- copy of contract needs to be available for next 10 years

Interested shareholders can vote but won’t count

Question 8

Can a:
- share buy back
- acceptance of a new director
- loan to director
- payment to director for loss of office
be done via short-notice or normal 14 day GM notice?

Answer 8

NO
Because in these occasions a copy of the contract must be made available for member inspection 15 days before meeting (= need 14 CLEAR days)

Would be possible to pass via written resolution though (and send contract w resolution)

Question 9

What are the occasions where information need to be made available to shareholders 15 days before GM?

Answer 9

• payment of directors loss of office
• proposed loan TO director
• share buy back
• acceptance of service contract

Question 10

Are payments for director’s loss of office allowed?

Answer 10

Yes if it is sum they are under legal obligation to pay (eg specified in service contract)
Any payment of £200 or more, that the director is not legally entitled to receive, requires approval via ordinary resolution

(And this can’t be done via short-notice GM or even general notice GM because needs to be exposed for 15 days)

Question 11

Do payments to past directors require shareholder approval?

Answer 11

Yes - OR
as well as payments to people connected to director

Question 12

What is necessary for a share buy back out of capital?

Answer 12

Shareholders SR (even if funds are mixed)

Directors will need to issue statement of solvency 1 week before GM, annexing auditor’s report

After SR, a notice must be put in London Gazette and copy of solvency statement and auditor report sent to members (+ file at CH)

Question 13

Procedure after removal/resignation of director

Answer 13

Must notify CH and complete form within 14 days

Question 14

Do shareholders have any timing restrictions if they decided to remove a director

Answer 14

Yes
Need to give general notice of intention and to director 28 before GM

Question 15

Which loans to directors wont need shareholder approval?

Answer 15

1- if loan is under £50.000 and for business reasons

2- if its a minor loan (under £10.000)

3- if its to defend company or related company on civil/criminal proceedings

4- if its to defend company or themselves against investigation

Question 16

What are the only OR that need to be filed at CH?

Answer 16

Those approving public companies of private companies with 1 type of share to issue new share type AND those authorising company to buy back shares (out of distributable profits)

Question 17

Do private companies with preference shares need a OR to issue more preference shares?

Answer 17

No but may need SR to disapply pre-emption rights

Question 18

How long do current members have to respond to pre-emption offers

Answer 18

14 days

Question 19

When do pre-emption rights not apply?

Answer 19

1- allotment of bonus shares
2- consideration is wholly or partly NON cash
3- shares pursuant to employee share scheme

Question 20

When shares are pre-emotion rights are disapplied, what else must there be done?

Answer 20

directors need to issue written statements justifying
1- reasons for rec
2- amount purchaser will pay
3- directors’ justification of amount

+15 days to file res at CH
+2 months to amend member register and prepare share certificate

Question 21

What defines corporate insolvency?

Answer 21

1- creditor has served statutory demand of outstanding sum of £750 or more and debtor hasn’t been able to pay in 21 days

2- creditor has obtained judgement against company and has tried to enforce but company has not repaid in full or at all

3- fails cash flow test (can’t pay debts as they are due)

4- fails balance sheet test (liabilities exceed assets)

Question 22

What type of resolution is needed for liquidation?

Answer 22

SR to start (MVL, CVL)
OR to appoint liquidator

Question 23

is mistake as to quality of subject matter sufficient to claim mistake?

Answer 23

no

Question 24

remember identity v creditworthiness and difference between being in-person or distance

Question 25

statement describing the type of mistake that will render a contract void for common mistake

Answer 25

Before the contract is made a change of circumstances renders performance of the contract impossible or radically different from what both parties anticipated.

Question 26

what does duress make a contract?

Answer 26

voidable

Question 27

is duress is established, does it affect the whole contract or just the variation?

Answer 27

just the variation (despite the potential gain of benefit/provision of consideration)

Question 28

X enters into a contract to sell their car with Y because of duress.
Y subsequently sells their car to Z.
Can X claim the car from Z?

Answer 28

No, if Z is a bona fide purchaser for value

Question 29

Is a claim for misrepresentation time barred?

Answer 29

not exactly but recission might be (by undue delay or because restitution is impossible) - could be awarded damages on a tortious basis though

HOWEVER
time for fraudulent misrepresentation starts running when the misrepresentation is discovered

Question 30

A year ago a client bought a hair dressing salon. After six months he discovered the seller had misrepresented the turnover of the business and gross annual profit. The client was advised to continue running the business but to put it up for sale. Last week the client sold the business and wants advice on what remedies (if any) he may have against the seller.
Can he claim anything?

Answer 30

The client cannot rescind the contract but may be awarded damages if he can prove a misrepresentation and loss

Question 31

A client saw a vase in an antique shop. The client thought it was very rare and worth far more than the price asked. The owner of the shop overheard the client telling someone this on the phone. The owner knew the vase was not rare and valuable but did not tell the client. The client bought the vase and has now discovered the vase is worth less than the price paid.
Does the client have a cause of action against the owner of the shop?

Answer 31

no because of the rule of buyer beware - generally, there is no obligation to say anything unless specifically asked

Question 32

is a half-truth a misrepresentation?

Answer 32

yes

Question 33

Does being drunk make a contract void?

Answer 33

If a contracting party has consumed so much alcohol on the facts that their mind was impaired by it, and if the other party knew of this, there is no contract.

Question 34

if a minor enters into a contract with a person, do they have to wait to be 18 to sue them?

Answer 34

no (contract is voidable for the minor, but person is bound and can be sued)

Question 35

When do you use the argument of apparent authority or the argument that X activity was one within the range carried out by X profession?

Answer 35

The question of apparent authority is relevant when there is a relationship of agency/principal

The question of analysing whether the activity is one within the range of the profession/area is relevant when the claimant is not necessarily aware of a principal and is just dealing directly with the def

Question 36

If 2 parties enter a contract with the intention of benefitting a 3rd party, will the 3rd party have rights under that contract?

Answer 36

not necessarily, unless the agreement EXPRESSLY provides they will acquire a benefit

Question 37

Can the short-term right to reject goods (C2B) be limited?

Answer 37

no - its 30 days per statute (CRA)

Question 38

Breach of carrying out services with reasonable care and skill (s13 The Supply of Goods and Service Act 1982) will give rise to which remedies?

Answer 38

damages to recover any loss (personal injury, to the item itself, and eg to the kitchen) - but the breach must have caused the loss

Question 38

Can 3rd parties take the benefit of an exclusion clause?

Answer 38

They may take the benefit of exemption clauses if named or otherwise identified as a member of a group in the clause but only to the same extent as the contracting party seeking to rely on the clause – Contracts (Rights of Third Parties) Act.

Question 39

difference between a leisure swimming pool 2cm too small and a tennis court for a professional tennis player 2cm too small

Answer 39

the pool would probably only get loss of amenity whilst the tennis court would probably get cost of cure as the size of the court is critical to a professional

Question 40

If the opening of a business is delayed by 1 month because builder didn’t finish shop in time, could the business owner claim damages for the distress in the delay?

Answer 40

No
Damages for distress are typically only awarded where the purpose of the contract was enjoyment, eg in relation to holidays.
Business owner would only get damage for business opp lost (although no special contracts as not foreseeable)

Question 41

When are nominal damages awarded?

Answer 41

Only where the claimant cannot establish a loss as a result