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Business Law and Practice > Company Formation > Flashcards

Company Formation Flashcards

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1
Q

What are the forms of articles?

A

Model Articles
Amended Articles
Tailor made articles

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2
Q

What needs to be delivered to companies house to incorporate from scratch?

A
  • Copy memorandum
  • Articles (if not MA)
  • Fee
  • Application form (IN01)
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3
Q

What should be in the application form IN01?

A

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)

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4
Q

What is the legal effect of articles of association?

A

Bind the company and members same as a covenant

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5
Q

How can articles be amended and what is the basic rule?

A

Special resolution of shareholders
Bona fide in the interests of the company as a whole

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6
Q

How can members enforce articles between members?

A

Enter into a shareholder agreement

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7
Q

How can articles be enforced between members and the company?

A

Court injunction for breaching article rights
Members obliged to comply
Members can’t enforce rights not relevant in their capacity as members

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8
Q

Can members of a company enforce articles directly against other members?

A

No only through the company itself

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9
Q

Is a memorandum required?

A

Not constitutionally but is required to be incorporated

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10
Q

What is a memorandum?

A

Declaration of company’s subscribers that they wish to form a company and agree to be members

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11
Q

What will need to be changed when incorporating a purchased shelf company?

A

Name
Registered office
Articles
Members/directors/secretary

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12
Q

Why is the order of appointing/resigning directors important when incorporating a shelf company?

A

There must always be at least one director if complying with unamended MA

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13
Q

How should members/directors/secretary be changed when incorporating a shelf company?

A

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.

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14
Q

What must a company name be?

A

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

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15
Q

Is a pre-incorporation contract enforceable?

A

Only against the promoter, they are personally liable

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16
Q

What are the post incorporation steps?

A

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

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17
Q

Why does the Contracts Act (Rights of Third Parties) not apply to pre-incorporation contracts?

A

Because it imposes an obligation on third parties as well as a benefit

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18
Q

When incorporating a new company with unamended MA, should you send articles to CH?

A

No, only fee, memorandum and form IN01

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19
Q

When is a new name effective?

A

When the registrar issues a new certificate of incorporation

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20
Q

When might a decision be referred to shareholders?

A
  • 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
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21
Q

How are decisions of the board taken?

A

By board resolutions at board meetings

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22
Q

How many votes does each director have in a board meeting?

A

One

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23
Q

How are board resolutions passed?

A

By simple majority unless agreed a particular decision requires unanimity

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24
Q

How can shareholder resolutions be made?

A

General meeting
Writing (private companies)

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25
Q

How many votes are needed to pass an ordinary resolution?

A

Over 50%

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26
Q

How many votes are needed to pass an special resolution?

A

75% or more

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27
Q

Does abstinence count as a vote for written resolutions?

A

Yes, a vote against

28
Q

How can shareholders vote in a resolution?

A

Show of hands or poll

29
Q

When can someone demand a poll?

A

In advance of GM
At GM before show of hands
Immediately after the result of a show of hands

30
Q

Who can demand a poll?

A

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

31
Q

If a company has share capital, how many votes do people get on a written resolution?

A

One vote per share

32
Q

Who can call a board meeting?

A

Any director

33
Q

How much notice is required for a board meeting?

A

Reasonable notice - the usual amount of time

34
Q

How many members to quorate a board meeting?

A

Minimum 2 directors if MA

35
Q

How can a board resolution be passed and how many votes?

A

simple majority show of hands, one vote each

36
Q

Who can call a general meeting?

A

Board usually convenes by BR

37
Q

How much notice is required for a general meeting?

A

14 clear days’ notice

38
Q

How many members to quorate a general meeting?

A

2 shareholders (1 if single member company)

39
Q

What is the clear day rule and how does it apply to email/post?

A

Exclude day of meeting and date of notice
Deemed served after 48 hrs if post/email

40
Q

How can notice for a general meeting be shortened?

A

By a majority of shareholders who
Together hold 90% or more of nominal shares with the right to vote

41
Q

Who can propose a written resolution?

A

Directors or members

42
Q

What happens if there are insufficient responses to a WR?

A

Lapses after 28 days from circulation date

43
Q

When can WR not be used?

A

To remove a director/auditor

44
Q

What are the post meeting matters?

A

Internal: minutes for 10 years and statutory books
Companies House: Special resolutions and amended articles with forms and New directors/resigning directors
Record keeping

45
Q

How could members of a company enforcee rights against other members?

A

Enter into a private agreement - shareholder agreement

46
Q

Who are the very first members/shareholders of a company?

A

Subscribers

47
Q

What is the advantage of a limited company?

A

Limited liability for shareholders - company is a separate legal entity

48
Q

What would you find in articles of association?

A

Appointing directors,

49
Q

What is the advantage of incorporating from scratch?

A

Doesn’t require amending
same day incorporation by 3pm mon-fri

50
Q

What is the disadvantage of incorporating from scratch?

A

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

51
Q

What is the advantage of a shelf company?

A

Trade/enter into contracts straight away
Ideal for short notice in non business hours

52
Q

What is the disadvantage of a shelf company?

A

Takes time + procedures (possibly fees) to transfer/convert company

53
Q

What resolution/meeting is required to change the name of a company?

A

Special - GM

54
Q

What resolution/meeting is required to change the registered office of a company?

A

Board - BM

55
Q

What resolution/meeting is required to change the articles of association of a company?

A

special - GM

56
Q

What resolution/meeting is required to appoint new the company secretary of a company?

A

Board - BM

57
Q

What is the default way of voting in a general meeting?

A

Show of hands

58
Q

What is a poll vote?

A

Vote per share held

59
Q

What is a show of hands vote?

A

Vote per person

60
Q

How are shareholders changed?

A

Stock transfer form
In practice - BM so directors can approve and secretary enter into register of members

61
Q

What resolution/meeting is required to appoint new directors of a company?

A

Ordinary or board (GM/BM) (Board in practice - easier)

62
Q

How do directors/secretaries resign?

A

Letter of resignation

63
Q

What resolution/meeting is required to change the chairperson of a company?

A

Board - BM

64
Q

What is quorum?

A

Minimum number of directors to be in meeting/pass decision

65
Q

What happens in a first board meeting?

A

New personnel

66
Q

When would you adjourn a board meeting?

A

Where passing by written resolution (ie no need for GM)

Business Law and Practice (10 decks)

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