Company Formation Flashcards
What are the forms of articles?
Model Articles
Amended Articles
Tailor made articles
What needs to be delivered to companies house to incorporate from scratch?
- Copy memorandum
- Articles (if not MA)
- Fee
- Application form (IN01)
What should be in the application form IN01?
o Proposed name/registered office
o Limited by shares? (or guarantee)
o Statement of capital/initial shareholdings (s10) (or details of guarantee s11)
o Proposed officers (directors + co secretary s12) + persons with significant control (s790)
o Statement of compliance (s13)
What is the legal effect of articles of association?
Bind the company and members same as a covenant
How can articles be amended and what is the basic rule?
Special resolution of shareholders
Bona fide in the interests of the company as a whole
How can members enforce articles between members?
Enter into a shareholder agreement
How can articles be enforced between members and the company?
Court injunction for breaching article rights
Members obliged to comply
Members can’t enforce rights not relevant in their capacity as members
Can members of a company enforce articles directly against other members?
No only through the company itself
Is a memorandum required?
Not constitutionally but is required to be incorporated
What is a memorandum?
Declaration of company’s subscribers that they wish to form a company and agree to be members
What will need to be changed when incorporating a purchased shelf company?
Name
Registered office
Articles
Members/directors/secretary
Why is the order of appointing/resigning directors important when incorporating a shelf company?
There must always be at least one director if complying with unamended MA
How should members/directors/secretary be changed when incorporating a shelf company?
o Shares held by subscribers transferred. Client becomes SH when on register of members using stock transfer form
o Reps appointed as directors/secretary AP01 directors, AP03 secretary
o First director(TM01)/secretary (TM02) resigns.
What must a company name be?
No offensive
End in Limited/ltd if private limited company
Must not be the ‘same as’ another on the index of company names
Approval if suggests connection with govt/public authority
Is a pre-incorporation contract enforceable?
Only against the promoter, they are personally liable
What are the post incorporation steps?
Chairperson: elect/casting vote?
Accounting reference date - default last day of month
Auditor: Board resolution if unamended MA
Tax registration: corporation tax/VAT/PAYE/National Insurance
Shareholder agreement: not required
Why does the Contracts Act (Rights of Third Parties) not apply to pre-incorporation contracts?
Because it imposes an obligation on third parties as well as a benefit
When incorporating a new company with unamended MA, should you send articles to CH?
No, only fee, memorandum and form IN01
When is a new name effective?
When the registrar issues a new certificate of incorporation
When might a decision be referred to shareholders?
- Matter outside powers of directors and must be effected by resolution of SH
- Matter within powers of directors but requires approval of SH before directors authorised
How are decisions of the board taken?
By board resolutions at board meetings
How many votes does each director have in a board meeting?
One
How are board resolutions passed?
By simple majority unless agreed a particular decision requires unanimity
How can shareholder resolutions be made?
General meeting
Writing (private companies)
How many votes are needed to pass an ordinary resolution?
Over 50%
How many votes are needed to pass an special resolution?
75% or more
Does abstinence count as a vote for written resolutions?
Yes, a vote against
How can shareholders vote in a resolution?
Show of hands or poll
When can someone demand a poll?
In advance of GM
At GM before show of hands
Immediately after the result of a show of hands
Who can demand a poll?
Chairperson of meeting
Directors
2 or more of persons with right to vote
Persons with 10% of total voting rights of all shareholders entitled to vote
If a company has share capital, how many votes do people get on a written resolution?
One vote per share
Who can call a board meeting?
Any director
How much notice is required for a board meeting?
Reasonable notice - the usual amount of time
How many members to quorate a board meeting?
Minimum 2 directors if MA
How can a board resolution be passed and how many votes?
simple majority show of hands, one vote each
Who can call a general meeting?
Board usually convenes by BR
How much notice is required for a general meeting?
14 clear days’ notice
How many members to quorate a general meeting?
2 shareholders (1 if single member company)
What is the clear day rule and how does it apply to email/post?
Exclude day of meeting and date of notice
Deemed served after 48 hrs if post/email
How can notice for a general meeting be shortened?
By a majority of shareholders who
Together hold 90% or more of nominal shares with the right to vote
Who can propose a written resolution?
Directors or members
What happens if there are insufficient responses to a WR?
Lapses after 28 days from circulation date
When can WR not be used?
To remove a director/auditor
What are the post meeting matters?
Internal: minutes for 10 years and statutory books
Companies House: Special resolutions and amended articles with forms and New directors/resigning directors
Record keeping
How could members of a company enforcee rights against other members?
Enter into a private agreement - shareholder agreement
Who are the very first members/shareholders of a company?
Subscribers
What is the advantage of a limited company?
Limited liability for shareholders - company is a separate legal entity
What would you find in articles of association?
Appointing directors,
What is the advantage of incorporating from scratch?
Doesn’t require amending
same day incorporation by 3pm mon-fri
What is the disadvantage of incorporating from scratch?
Can’t start trading/entering into contracts until certificate of incorporation issue
Time drafting initial documents
same day service = if using special software filing/paper filing
What is the advantage of a shelf company?
Trade/enter into contracts straight away
Ideal for short notice in non business hours
What is the disadvantage of a shelf company?
Takes time + procedures (possibly fees) to transfer/convert company
What resolution/meeting is required to change the name of a company?
Special - GM
What resolution/meeting is required to change the registered office of a company?
Board - BM
What resolution/meeting is required to change the articles of association of a company?
special - GM
What resolution/meeting is required to appoint new the company secretary of a company?
Board - BM
What is the default way of voting in a general meeting?
Show of hands
What is a poll vote?
Vote per share held
What is a show of hands vote?
Vote per person
How are shareholders changed?
Stock transfer form
In practice - BM so directors can approve and secretary enter into register of members
What resolution/meeting is required to appoint new directors of a company?
Ordinary or board (GM/BM) (Board in practice - easier)
How do directors/secretaries resign?
Letter of resignation
What resolution/meeting is required to change the chairperson of a company?
Board - BM
What is quorum?
Minimum number of directors to be in meeting/pass decision
What happens in a first board meeting?
New personnel
When would you adjourn a board meeting?
Where passing by written resolution (ie no need for GM)
