Company Law Pre-Reading Flashcards
Which ONE of the following correctly represents the characteristics of an LLP?
(a)
The LLP is a separate legal entity and enters into contracts on its own behalf. All partners have limited liability. LLPs must be registered at Companies House and must submit annual accounts.
(b)
The LLP is a separate legal entity and enters into contracts on its own behalf. All partners have limited liability. Only professional firms such as law firms and accountancy firms may become LLPs.
(c)
The LLP is a separate legal entity and enters into contracts on its own behalf. All partners have limited liability. An LLP is a better structure for investment than a traditional partnership as it can issue shares and therefore attract investment.
(d)
The LLP is a separate legal entity and enters into contracts on its own behalf. All partners have limited liability. Although LLPs must be registered at Companies House there are no further filing requirements for LLPs.
(e)
The LLP is a separate legal entity and enters into contracts on its own behalf. Certain partners can have limited liability, but these partners must not be involved in the management of the business and are known as sleeping partners.
(a) The LLP is a separate legal entity and enters into contracts on its own behalf. All partners have limited liability. LLPs must be registered at Companies House and must submit annual accounts.
Which ONE of the following is correct in relation to a traditional partnership?
(a) Partnerships must be registered at Companies House but there is no requirement to file annual accounts.
(b)
A partnership is formed when two or more persons sign a Partnership Agreement.
(c)
In the absence of express agreement, the Partnership Act 1890 provides that all profits are shared equally, partners are jointly and severally liable for debts of the partnership and all partners can participate in management.
(d)
Under the Partnership Act 1890, in the absence of express agreement, partners will cease to be liable for debts incurred by the partnership at a time when they were partners once they leave the partnership.
(e)
In the absence of an express written Partnership Agreement, the Partnership Act 1890 provides that all profits are shared equally, partners are jointly and severally liable for debts of the partnership and all partners can participate in management.
(c) In the absence of express agreement, the Partnership Act 1890 provides that all profits are shared equally, partners are jointly and severally liable for debts of the partnership and all partners can participate in management.
Which ONE of the following is correct?
(a)
A limited partnership can be formed without any required formalities.
(b)
A partnership can be described as two or more people forming an intention to work together with a view to profit.
(c)
LLPs are required to file annual accounts at Companies House.
(d)
A sole trader requires a certificate of incorporation to start trading.
(c) LLPs are required to file annual accounts at Companies House.
Which ONE of the following is correct?
(a)
A private company can raise equity finance by offering to sell its shares to the public.
(b)
All companies are required to have one annual general meeting each year.
(c)
Directors of a company can also be shareholders in the same company.
(d)
Private limited companies are required to have at least two directors.
(c) Directors of a company can also be shareholders in the same company.
Jason, Kim and Sophia have set up a brand consultancy business (Branded). The business is doing well and they now are looking to expand. They have a number of family members and friends who are willing to invest in the business. They seek your advice as to whether to incorporate the business as a private limited company. Which of the following is correct?
(a)
An advantage of incorporating the business as a private limited company is that Branded will be able to offer shares to the public in order to increase the capital available to the business.
(b)
A key advantage of incorporation is that the directors of the company are able to run the company without any input from the shareholders.
(c)
A key advantage of incorporation is that shareholders are able to invest in shares in the company with their liability being limited to the amount unpaid on their shares (if any).
(d)
Branded can only be incorporated as a private limited company if it has at least £50,000 of share capital.
(c) A key advantage of incorporation is that shareholders are able to invest in shares in the company with their liability being limited to the amount unpaid on their shares (if any).
Which ONE of the following is correct in relation to a listed company?
(a)
The requirements of CA 2006 do not apply to listed companies.
(b)
All public companies are listed.
(c)
A listed company is a public limited company whose shares are listed on a regulated investment exchange such as the London Stock Exchange.
(d)
Any company can list its shares on the London Stock Exchange.
(c) A listed company is a public limited company whose shares are listed on a regulated investment exchange such as the London Stock Exchange.
Which ONE of the following is correct in relation to the company’s articles of association?
(a)
The articles take effect as a contract between the company and its members and between the members themselves.
(b)
The articles take effect as a contract between the directors and the shareholders.
(c)
The articles take effect as a contract between the members themselves only.
(d)
The articles will always override the provisions of CA 2006.
(a) The articles take effect as a contract between the company and its members and between the members themselves.
Which one of the following correctly states the position with regards to provisions in the Memorandum restricting the objects of companies formed under the Companies Act 1985?
(a)
Any restrictions in the Memorandum of companies incorporated under the 1985 Act are no longer binding, since under the CA 2006, the Memorandum has no constitutional significance.
(b)
Any restrictions in the Memorandum of companies incorporated under the 1985 Act continue to bind the company and cannot be removed.
(c)
Any restrictions in the Memorandum of companies incorporated under the 1985 Act take effect as if they were contained in the Articles and are binding until the Articles are amended or new Articles adopted.
(c) Any restrictions in the Memorandum of companies incorporated under the 1985 Act take effect as if they were contained in the Articles and are binding until the Articles are amended or new Articles adopted.
Which one of the following correctly describes the position of the objects clause (the clause setting out the purposes for which the company was formed) of companies incorporated under the Companies Act 2006?
(a)
All companies formed under CA 2006 will contain a provision in the Memorandum setting out the purposes for which the company was formed. This is known as an “objects clause”.
(b)
Companies formed under CA 2006 have unrestricted objects, unless a specific restriction is inserted into the company’s articles.
(c)
Companies formed under CA 2006 have unrestricted objects. It is not possible to restrict the objects of a company formed under CA 2006.
(b) Companies formed under CA 2006 have unrestricted objects, unless a specific restriction is inserted into the company’s articles.
When incorporating a company from scratch, which one of the following correctly states the documents that must be filed at Companies House?
(a)
The Memorandum, Articles of Association (unless Model Articles are used without amendment), fee and form IN01.
(b)
The Memorandum, Articles of Association (unless Model Articles are used without amendment), Certificate of Incorporation and fee.
(c)
The Articles of Association (unless Model Articles are used without amendment), fee and form IN01.
(d)
The Articles of Association (unless Model Articles are used without amendment), fee, Share Certificates and form IN01.
(a) The Memorandum, Articles of Association (unless Model Articles are used without amendment), fee and form IN01.
When does a company become a legal entity?
(a)
From the date of incorporation as set out on the certificate of incorporation.
(b)
From the date on which the incorporation documents are filed at Companies House.
(c)
From the date on which the incorporation documents are received by Companies House (if this is different from the date of filing).
(d)
From the date on which the company is allocated a registered number.
(a) From the date of incorporation as set out on the certificate of incorporation.
Your client has purchased a shelf company which has been incorporated with Model Articles and seeks your advice as to how to effect a change of name of the company. Which one of the following is correct in relation to the procedure required to change the name of the company?
(a)
The name may be changed by a board resolution of the directors.
(b)
An ordinary resolution of the shareholders is required.
(c)
A special resolution of the shareholders is required.
(d)
It is not possible to change the name of a company.
(c) A special resolution of the shareholders is required.
What is the ‘nominal value’ of a share?
(a)
The amount paid by the shareholder for the share at the time of purchase.
(b)
The minimum subscription price for that share.
(c)
The amount over and above £1 that the shareholder pays for the share on subscription.
(d)
The maximum subscription price for that share.
(b) The minimum subscription price for that share.
What is the ‘issued share capital’ of a company?
(a)
The total number of shares in issue at that time.
(b)
The total amount in value (nominal and premium) of all shares in issue at that time.
(c)
The total number of shares that the company is permitted to allot.
(d)
The total amount in value that has been paid up on all shares in issue at that time.
(b) The total amount in value (nominal and premium) of all shares in issue at that time.
Which one of the following would be a Person with Significant Control in relation to a company?
(a)
A shareholder who holds 25% of the voting share capital in the company, who is also a director.
(b)
Any director.
(c)
A shareholder who holds 30% of the voting share capital of the company.
(c) A shareholder who holds 30% of the voting share capital of the company.
