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F4 > Company Law > Flashcards

Company Law Flashcards

1
Q

What is a Corporation sole?

A

a public office occupied by a living person, death of the person doesn’t effect the public office it continues by choosing another person

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2
Q

What is Corporation aggregate?

A

a group of like minded people that set themselves as a company with a separate legal identity

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3
Q

What are the three ways of forming a company?

A

1) Royal charter
2) Statute
3) Registration

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4
Q

What is formation by Royal charter?

A

company is created by asking the monarch

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5
Q

What is formation by Statute?

A

parliament create a company by statute

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6
Q

What is formation by registration?

A

company is formed by registration with registrar of companies

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7
Q

What is a Public quoted company?

A

public company limited by shares not guarantee and share price quoted on recognized stock exchange

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8
Q

What is a Public unquoted company?

A

public company limited by shares but not quoted on stock market

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9
Q

What defines a public company?

A
  • is limited by shares
  • the constitution (articles of association) states that its public
  • ends in public limited company or PLC
  • has an allotted share capital of no less than £50,000
  • of which no less than 25% is credited as paid up
  • together with whole of share premium
  • although exists from date of incorporation but cant trade until it has the trading certificate
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10
Q

Who issues the trading certificate?

A

The registrar

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11
Q

What does the company need to state in the application for trading certificate?

A
  • nominal value of allotted shares are not less than £50,000
  • what the formation expenses were/are
  • to who the formation expenses have been paid to/payable to
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12
Q

What must accompany an application for a trading certificate?

A

a statement of compliance

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13
Q

What happens if a public company fails to obtain a trading certificate within 12 months of incorporation?

A

the court on application can grant a liquidation order against the company

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14
Q

What is meant by lifting the veil?

A

When court looks behind the veil of incorporation, and deals with the person rather than the company

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15
Q

Why is the veil lifted on corporations?

A

to prevent fraud, illegality and oppression

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16
Q

What company in France is similar to a UK public company?

A

Societé Anonyme (SA)

  • no less than 6 members
  • between 3-12 directors
  • must have auditor
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17
Q

What company in France is similar to a UK private company?

A

société à responsabilité limitée (SaRL)

  • does not have share capital
  • financing divided into parts which holders cant sell to public
  • commonly used for family companies
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18
Q

What company in Germany is similar to UK public company?

A

Aktiengesellschaft (AG)

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19
Q

What company in Germany is similar to a UK private company?

A

Gesellschaft mit beschränkter Haftung

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20
Q

What is a Societas Europaea (SE)?

A

a european public company

  • members limited liability
  • minimum capital € 120,000
  • registered in state of administrative headquarters
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21
Q

What are the four ways of establishing a European company by companies from at least 2 EU states?

A
  • merger
  • formation of new holding company
  • formation of new subsidiary
  • transforming a company in 1 EU state which owns a subsidiary for at least 2 years in another EU state
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22
Q

Who creates a company?

A

a promoter

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23
Q

Who is liable for pre incorporation contracts?

A

the promoter

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24
Q

Who can be a promoter?

A

anyone no qualifications required

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25
Q

Who pays for the formation expenses of a company

A

the promoter because the company does not exist yet

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26
Q

What is the streamlined company registration scheme?

A

the information necessary to form a company is sent to all relevant agencies as well as Companies house

27
Q

What does a Memorandum state?

A

that subscribers wish to form a company, agree to be members and agree to take at least one share each

28
Q

What does a company’s constitution consist of?

A
  • articles of association

* resolutions and agreements affecting the articles

29
Q

What are the 2 major areas on articles of association?

A

1) the contractual force

2) the alterability

30
Q

What is contractual force?

A

when a person becomes a member of a company its though they have formed a contract with the company and other members. so members are binded to each other as well as to the company

31
Q

What is alterability?

A

articles can only be changed for benefit of the company as a whole and the members

32
Q

What is the procedure of alteration?

A
  • special resolution
  • 75% majority
  • 14 days notice
  • resolution copy sent to registrar within 15 days
  • amended articles sent to registrar
  • alteration binding on all members
  • articles can state that affected member must be present
  • affected member can prevent alteration by not attending
  • articles can require more than 75% majority
  • can never be drafted to prevent amendment
33
Q

What is a director?

A

is anyone who occupies the position of director by what ever name called

34
Q

What is a shadow director?

A

a person who’s instructions a director follows

35
Q

What is a de facto director?

A

a person who portrays to act as if they are a director

36
Q

What is an alternate director?

A

a person appointed by a director who is unable to attend board meetings

37
Q

What are non-executive directors?

A

non-executive directors act in a supervising role over executive directors, bringing an independent view, help with effective leadership and maintain financial honesty

38
Q

What is the minimum amount of directors in a private company?

A

1

39
Q

What is the minimum amount of directors in a public company?

A

2

40
Q

In order to be a director, what must that person be clear of?

A
  • must not be disqualified under CDDA
  • not be bankrupt
  • not be unsound of mind
41
Q

What happens if a director is absent from board meetings for more than 6 months?

A

they will loose office

42
Q

How long is the disqualification period of a director?

A

up to 15 years

43
Q

What happens if a disqualification order of director is broken?

A

up to 2 years in prison

44
Q

What happens if a director is involved in more than 2 insolvent liquidations in a period of 5 years?

A

director is disqualified

45
Q

What happens if a director fails to notify the registrar of changes persistently 3 offences in 5 years?

A

director is disqualified

46
Q

Where are the first directors named?

A

in the documents sent to the registrar before incorporation

47
Q

After the first directors are appointed who can appoint further directors?

A
  • members in general meeting
  • other directors to fill temp vacancy
  • the court
  • a lender if part of loan agreement
  • administrator under admin order
48
Q

What happens to directors appointed on casual term?

A

they have to resign at next general meeting and submit self for re-election

49
Q

What is the 1/3 rotation procedure?

A

Is when after the first annual general meeting all directors resign, thereafter on general meetings 1/3 of the directors resign and submit for reelection

50
Q

What is the registrars gazette?

A

the registrars newspaper

51
Q

How are directors appointed?

A

through ordinary resolution

52
Q

How many days before meeting is notice of ordinary resolution given to director?

A

28 days

53
Q

How many days before the meeting must members be notified?

A

21 days

54
Q

Why is the director given 28 days notice of resolution?

A

to have the opportunity to make written representations which is handed out to members at same time as 21 days notice

55
Q

What is required of the top 350 public quoted companies each year at the general meeting?

A

all directors to resign

56
Q

How much notice is required with special resolution?

A

requires 75% majority and 14 days notice

57
Q

How much majority is required for a ordinary resolution

A

simple majority with special notice

58
Q

Who approves directors service contracts that are longer than 2 years?

A

the members

59
Q

Who are persons with significant control (PSCs)?

A
  • have >25% of company shares
  • have >25% voting rights
  • have right to appoint and remove majority of board of directors
  • individuals that have right to excersize control over company
60
Q

Who can appoint an auditor?

A
  • the promoter
  • the directors
  • the members
  • secretary of state
61
Q

When should the first AGM be held after incorportation?

A

no more than 18 months after incorporation

62
Q

When should subsequent AGM meetings be held?

A

no more than 15 months after previous

63
Q

How many days notice is required to hold an AGM?

A

21 days

64
Q

In an AGM what ordinary business is discussed?

A

1) formal presentation of financial statements
2) reappointment of directors
3) reappointment of auditors
4) approval of divedend proposed by directors

F4 (14 decks)

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