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Company Management Flashcards

1
Q

How many directors must a a plc have

A

at least two

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2
Q

how many directors must all companies have

A

at least one

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3
Q

How can directors be appointed

A

signing section 9 document on registration of new company
Appointed by ordinary resolution at an AGM (50%)
Casual vacancy appointed by the board

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4
Q

What type of director is described
a director who is usually charged with performing a specific role, usually an employee of the compnay

A

executive director

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5
Q

What type of director is described
A director who does not have a particular function but generally just attends board meetings. also considered to be independent viewer of board’s deliberations

A

NEDs

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6
Q

What type of director is described
The articles usually provide for directors to appoint one or more of their number to take this role, they are charged with carrying out day to day management functions

A

MD

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7
Q

What type of director is described
a person who acts in place of another director

A

alternate director

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8
Q

What type of director is described
Someone who cannot be appointed as director (disqualified/don’t want to be) but the board act in accordance with their actions

A

shadow director

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9
Q

What type of director is described
Anyone who acts as a director by virtue of their conduct rather than by formal appointment

A

de facto director

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10
Q

Any change in the directors of a company should be recorded in the company’s register of directors and notified to the registrar within

A

14 days

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11
Q

How may directors be removed

A

removal - by ordinary resolution with special notice (28 days)
Resignation - in writing
Retirement - not stand for re-election
Termination per the articles
Disqualification

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12
Q

In a public company, how many directors retire at each agm

A

1/3 OF NED ON FIFO BASIS

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13
Q

Court may / must make disqualification of director
director has been in persistent default of CA 2006

A

May disqualify - up to 5 years

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14
Q

Court may / must make disqualification of director
Director has committed serious offence

A

may disqualify - up to 15 years

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15
Q

Court may / must make disqualification of director
director found guilty of fraudulent trading/liable for wrongful trading

A

may disqualify - up to 15 years

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16
Q

Court may / must make disqualification of director
Secretary of State considers it to be in the public interest

A

May disqualify up to 15 yeras

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17
Q

Court may / must make disqualification of director
breaches of competition law have occurred

A

may disqualify - up to 15 years

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18
Q

Court may / must make disqualification of director
person has been director of a company which has at any time become insolvent

A

Must disqualify

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19
Q

Court may / must make disqualification of director
their conduct as a director of that company makes them unfit to be concerned in the management o fa company

A

Must disqualify

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20
Q

when court must make disqualification order, what is the time period

A

2 - 15 years

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21
Q

T/F
Bankruptcy orders will result in automatic disqualification

A

True

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22
Q

What is the below
applies where company is wound up and directors knew (should have known) that there was no reasonable prospect of the company avoiding going into insolvent liquidation, and they did not take sufficient steps to minimise loss of the creditors

A

wrongful trading - civil

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23
Q

what is the below
any business of a company is carried on with the intent to defraud creditors of the company or for any fraudulent purpose. the offence is committed by any person who is knowingly a part of a business carried on in that manner

A

fraudulent trading - civil and maybe criminal

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24
Q

Punishment for fraudulent trading

A

civil liability
criminal - fine dn or imprisonment for up to 10 years

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25
Where do directors powers come from
the articles of association and the laws of agency
26
Who do directors owe duty to
the company as a whole
27
Individual directors only have the power to bind the company if they have
express actual authority implied actual authority ostensible/apparent authority
28
General duties of directors (7)
Act within powers Promote success of company Independent judgement Reasonable skill care and diligence Avoid conflict of interest Avoid taking benefits from third parties Disclose if they have an interest in a transaction
29
what director duty is defined Act in accordance with the company's constitution and exercise powers for purposes conferred
act within powers
30
what director duty is defined no precise duty but act in good faith and long term interests of the members
promote the success of the company
31
what director duty is defined exercise powers according to own sound judgement ok to delegate
independent judgement
32
two tests for reasonable skill care and diligence
1. exercise knowledge skill and experience reasonably expected of a director in that position AND 2. Exercise the knowledge skill and experience of that particular director
33
Is it an excuse for a director to stay they lacked expertise if a reasonable director in the same position would have that expertise
No
34
what director duty is defined director's own interest must not actually or potentially conflict with those of a company. no duty is infringed if the matter has been authorised by the directors.
Avoid conflict of interest
35
T/F In private company, directors can authorise conflict if articles do not invalidate
True
36
T/F in a public company, directors can authorise conflict if articles specifically say so
True
37
directors must not accept benefit from a third party by reason for
because they are a director doing/not doing something as a director
38
If a director becomes aware they have an interest in a contract between company and third party what must happen
must be disclosed to the full board at the next board meeting unless it cannot reasonably be regarded as likely to give rise to a conflice
39
if a director gives notice they have an interest in a contract between the company and third party, the notice must be
made at board meeting or in writing OR made by general notice to the directors that the director's interest in the transaction exists and it should be discussed at the next board meeting
40
What happens if a director does not give notice of their interest in a contract between the company and third party
contract will be voidable and the director with interest may be liable
41
Any provision to exempt a director from or indemnify them against liability for breach of duty is
void
42
T/F The articles may authorise anything that might otherwise be a breach of statutory duty
True
43
T/F Directors will not be liable for breaching statutory conflict of interest rules if they follow any lawful provisions for dealing with them contained in the articles
True
44
T/F Articles may normally permit less onerous regulations than CA 2006
False
45
T/F Some conflicts of interest by independent directors are permissible by the articles
True
46
Must the director have regard for the following matter when discharging their duty to promote the success of the company The impact of the company's operations on the community and environment
Yes
47
Must the director have regard for the following matter when discharging their duty to promote the success of the company The interests of the creditors of the company
No
48
Must the director have regard for the following matter when discharging their duty to promote the success of the company The need to act fairly between the members of the company
Yes
49
Must the director have regard for the following matter when discharging their duty to promote the success of the company the desirability of maintaining a reputation of high standards of business conduct
Yes
50
a single member limited company must include
a statement on its register that there is only one member
51
What is an advantage of a shareholders' agreement
it does not require registration
52
What transactions require members' approval
Service contracts (>2years) Substantial property transaction loans and quasi loans payments for loss of office or on retirement
53
What are substantial property transactions
lower of assets exceeding £100,000 or 10% of net assets there is de minimis value of 5000
54
Failure to obtain approval for payments for loss of office or on retirement will result in
the payment being held on trust for the company
55
variation of class rights holders of ?? of the class shares can apply to the court for cancellation
15%
56
Calling meetings can be requisitioned by holders of usually more than >>> companies >> with voting rights
5% of companies paid up capital
57
notice of members resolution must be given by the company and requested by members holding???
5% of voting rights
58
Share buyback out of capital (private only) who can apply to court to prohibit
any member or creditor
59
registration of limited company as unlimited who can prevent
individual members
60
A member may bring a derivative claim on behalf of the company in respect of
an actual or proposed act or omission by a director which involves negligence or breach of duty or default or breach of trust
61
Permission for derivative claim refused if
hypothetical director acting to promote the success of the company would not continue with the claim or The act/omission has been approved by the shareholders.
62
Unfairly prejudicial or not? Payment of excessive bonus and pension contributions
Yes
63
Unfairly prejudicial or not? Diversion of a company’s business to a director-controlled company
Yes
64
Unfairly prejudicial or not? Making inaccurate statement to shareholders
Yes
65
Unfairly prejudicial or not? Improper allotment of shares
Yes
66
Unfairly prejudicial or not? exclusion and removal from the board
Yes
67
Unfairly prejudicial or not? failure by parent to pay debts of sub
not
68
Unfairly prejudicial or not? NON-COMPLIANCE WITH stock exchange rules, city code, and Cadbury code
Not
69
Unfairly prejudicial or not? Failure to increase petitioner's shareholding
Not
70
Unfairly prejudicial or not? Diversion of the company's business to a director-controlled company
Yes
71
Unfairly prejudicial or not? failure to call a general meeting
Yes
72
Unfairly prejudicial or not? late presentation of the company's accounts
No - bad management
73
where can orders be made for just and equitable winding up
where company formed for illegal or fraudulent purpose Complete deadlock in the management of its affairs Where directors deliberately withhold information from shareholders so that the shareholders had no confidence in the company’s management
74
Who may call a general meeting (4)
Directors 5% of members The court (on own motion or on the application of director or member) An auditor who gives notice of their resignation, accompanied by a state of circumstances connected with their resignation
75
Specific situation where only public company member meeting called
net assets fall to half or less of the called up share capital
76
If members request general meeting (with 5% backing_ directors must call meeting with xx days and the meeting must b held within xx days of the director calling the meeting
21 28
77
Notice of at least xx days must be given of a meeting (unless shorter period of notice agreed)
14
78
If meeting called by SH not taking place in time, shareholders may call a meeting to take place within...
3 months of the initial request to the directors
79
Short notice requires support of members holding at least
90% of the nominal value of shares/voting rights 95% public companies
80
what must be stated in notice to director
time date place of meeting general nature of the business to be discussed
81
What is special notice
in order to remove director or auditor, shareholders' must give 28 days notice to the company
82
Failure for public company to hold AGM RENDERS EVERY OFFICER OF THE COMPANY who is in defualt
liable to a fine
83
Notice for AGM
21 Days unless all members agree to shorter
84
Required holding to place item on agenda of meeting
5% or 100 members holding on average £100 each
85
Notice for ordinary resolution
14 days
86
Notice for special resolution
depends on type 21 AGM 14 normal
87
Votes for an ordinary
more than 50%
88
votes for special resolution
more than or equal to 75%
89
Do ordinary resolution need to be filed with registrar
only for changes to directors and auditors
90
Do special resolution need to be filed with registrar
Yes
91
What kind of meeting is used for the following any business for which a special resolution is not required specifically by enactment or articles
ordinary
92
What kind of meeting is used for liquidations changes of articles of associations change in company name
Special resolution
93
Can written resolution be used for removal of director or auditor
No
94
For general meeting in public company, what percentage of the voting rights is needed for short period notice
95%
95
for AGM for public, what percentage of voting needed for short period notice
100%

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