Company Makeup

Question 1

What is the main functions of a Company Memorandum

Answer 1

is the document that governs the relationship between the company and the outside
statement that the subscribers wish to form a company under the 2006 Act
have agreed to become members
and, in the case of a company that is to have a share capital, to take at least one share each
Defines the power and objectives of the company

Question 2

What is the main functions of Articles of Association

Answer 2

Regulations which govern the internal management of the company
Records the rights and duties of its members and the company
Issued alongside with the Memorandum of Association

Question 3

What other clauses does the Articles of Association include

Answer 3

Contains additional clauses such as :-
Procedure relating to issue of capital and calls on capital

Procedure relating to the transfer of shares

Procedure relating to the forfeiture of shares

Procedure relating to voting at meetings

Number, remuneration, qualifications retirement and disqualification of directors

Borrowing powers of the company

Annual accounts and audit

Dividends and reserves

Notices to members

Procedures to be followed in the event of the winding up to the company

Question 4

What books must be kept by a compay

Answer 4

Register of Members

Register of Charges

Question 5

What is a Register of Members

Answer 5

Register recording names and addresses of members and

Number of shares held by each Member
Amount paid for each share
The date at which each person became or ceased to be a member

Register should be kept at the companys registered office and be open for inspection for at least two hours on each business day

Minute Book - containing minutes taken at general meetings and meetings of directors. These should be signed by the chairman of the meeting

Register of directors and secretary with names addresses, nationality and other occupations and directorship held

Books of accounts, ledgers, day books etc containing all the companys accounting transactions

Question 6

What is a Register of Charges

Answer 6

Contains details of all charges and mortgages secured on the property of the company

Question 7

What should the annual return submitted to the Registrar of Companies contain and when is this usually submitted

Answer 7

To be submitted at least once in every calendar year.

Must be signed by the company secretary and a director and submitted within 42 dsys of the annual general meeting

It must contain
Amount of share capital and the number of shares
The number of shares taken up

Amount called up on each share and the total of calls received and unpaid

total of commission paid on shares and debentures

total number of shares forfeited

details of share warrants

particulars of the total indebtedness of the company in respect of mortgages and charges

Details and address of all members together with the number of sheres held by each at the date of the return and details of all shares transferred since the date of the last return

Names, nationatlities, addressess occupations and other directorships of all directors

Copy of the final accounts i.b balance sheet, profit and loss accounts ect certified by the company secretary and a director together with a copy of the directors report and auditors report must be filed

Question 8

What is the difference between a preference share and an ordinary share

Answer 8

Preference share have a preferential right over any other class of share usually to a fixed dividend out of profits before any dividend is paid to ordinary shares

Question 9

Are preferential shareholders guaranteed their fixed percentage

Answer 9

No they are merely guaranteed that they will be satisfied first

Question 10

What is the money raised through equity or ordinary shares called

Answer 10

Equity Share Capital or Ordinary Share Capital

Question 11

What is the money raised through preference shares called

Answer 11

Preference Share Capital

Question 12

What is authorised capital otherwise known as

Answer 12

nominal or registered capital

Question 13

What is authorised capital

Answer 13

The amount of capital the company is authorised to issue by its memorandum of association

Question 14

What are premium shares

Answer 14

Shares sold at an amount in excess of their nominal value

Should be shown as a separate item on the balance sheet.

Question 15

What can the premium of a premium share be used for

Answer 15

paying up unissued shares of the the company

to be issued as bonus shares to existing shareholders

writing off prelininary expenses incurred at the time of setting up the company

providing the premium payable on redeeming preference shares

in certain specified cases in reducing the companys share capital

Question 16

What is a debenture

Answer 16

Debenture is represented by a document or cerificate signed by the authoriszed officers of a company,
acknowledging money lent and guaranteeing repayment with interest with or without security on the assets of the company
for due performance of its obligation
Classed as a creditor and not a share
Debenture holder will receive a fixed percentage regardless of wether the company has made a profit or not

Question 17

Company starts in business having decided that it is total capital shall not be more than £1 million -what with the authorised capital Be

Answer 17

1 million

Question 18

Give one explanation as to why a share issue may be sold above par

Answer 18

Preserve the position of the other shareholders who bought earlier shares
Eg if those shareholders 40 000 originally put in 50000 capital into the business which after five years is now worth 120000 share worth 3 if sold to new 10000 shareholders capital would be 130000 but share now is 2.6