Company Law Flashcards
How much is owed by members at winding up of a company for companies with and without shares?
Fully paid shares - no further liability
Partly paid shares - pay outstanding amount
Share premium - unpaid premium is owed unless not original shareholder
Guarantee - amount guaranteed to pay
What is the veil of incorporation?
A boundary drawn between the members and the company for the purpose of liability and identification
When might the veil of incorporation be lifted by the courts?
Groups of companies
To produce a tax liability
To prevent tax evasion
To give entitlement to compensation
To reveal true national identity and expose illegality
Quasi-partnerships
Where a company is a sham
NOT: creditors of insolvent subsidiary not paid in full even though company is solvent
What are situations where legislation provides for the veil of incorporation to be lifted?
Where the director is disqualified
Fraudulent and wrongful trading
Trading without a trading certificate
What is the case of Ebrahimi?
In a co-split partnership with N, another person joined, split 40-40-20, 2 joined to be 40-60, made a quasi-partnership and so Ebrahimi dissolved it
What are special and ordinary resolutions?
Special requires > 75% of votes
Ordinary requires =>50% of votes
How often can companies change their status and what is required to do so?
Limited to unlimited - consent of all shareholders
Unlimited to limited - special resolution
What are the key differences between public and private companies?
Liability: limited/ limited or unlimited
Share capital: minimum £50000/no min
Trading: needs certificate/ once incorporated
Public offers: securities to public/ can’t
Name: plc/ ltd
Loans: member approval for loans to persons connected with directors/ don’t apply
Directors: at least 2, at least 1
Company secretary: needs one/doesn’t
Written resolutions: n/a / pass instead of meetings
AGMs: must hold/ need not hold
Accounts: file within 6 months, show in GM/ file within 9 months
Small and medium sized: n/a / audit exemptions
Auditors: must appoint each year/ re-appointed subject to conditions
Pre-emption rights: may not be excluded/ may
Payment for shares: must be 1/4 paid up / n/a
Reduction of capital: special res confirmed by court / special res and directors solvency statement
Purchase shares from capital: n/a / subject to conditions
What are the advantages and disadvantages of off the shelf companies?
Quicker - ready to go
Avoids liability from pre-incorporated contracts
Change of name
Transfer of shares
Change of directors/secretary
Alteration of articles
How is a company formed?
Registrar will issue a certificate of incorporation - date and number
Conclusive evidence
Obtain a trading certificate by submitting an application stating the nominal value of allotted share capital and statement of compliance
What documents must be submitted to the company registrar?
Memorandum of association - subscribers wish to form company, become members, take 1 share each
Application - name, liability, private or public, registered office, intended address
Statement of capital - number of shares, aggregated nominal value, classes of shares, amount paid and unpaid on each share
Statement of guarantee - max amount each member undertakes to contribute to net assets if wound up
Statement of proposed officers - particulars and consent of first director/ secretary
Statement of compliance
What is needed if the company do not want to use the default articles?
Articles of association
What is a promoter?
Takes procedural steps to get company incorporated and makes business preparations
What are the duties the promoter owes the company?
Reasonable care and skill
Fiduciary duty (good faith) to disclose personal interests
What is a pre-incorporation contract?
Contract the promoter enters in the name of the company before the company has come into existence
