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Company Management Flashcards

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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
Q

Where do directors powers come from

A

the articles of association and the laws of agency

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26
Q

Who do directors owe duty to

A

the company as a whole

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27
Q

Individual directors only have the power to bind the company if they have

A

express actual authority
implied actual authority
ostensible/apparent authority

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28
Q

General duties of directors (7)

A

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

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29
Q

what director duty is defined
Act in accordance with the company’s constitution and exercise powers for purposes conferred

A

act within powers

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30
Q

what director duty is defined
no precise duty but act in good faith and long term interests of the members

A

promote the success of the company

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31
Q

what director duty is defined
exercise powers according to own sound judgement
ok to delegate

A

independent judgement

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32
Q

two tests for reasonable skill care and diligence

A
  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
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33
Q

Is it an excuse for a director to stay they lacked expertise if a reasonable director in the same position would have that expertise

A

No

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34
Q

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.

A

Avoid conflict of interest

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35
Q

T/F
In private company, directors can authorise conflict if articles do not invalidate

A

True

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36
Q

T/F in a public company, directors can authorise conflict if articles specifically say so

A

True

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37
Q

directors must not accept benefit from a third party by reason for

A

because they are a director
doing/not doing something as a director

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38
Q

If a director becomes aware they have an interest in a contract between company and third party what must happen

A

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

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39
Q

if a director gives notice they have an interest in a contract between the company and third party, the notice must be

A

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
Q

What happens if a director does not give notice of their interest in a contract between the company and third party

A

contract will be voidable and the director with interest may be liable

41
Q

Any provision to exempt a director from or indemnify them against liability for breach of duty is

A

void

42
Q

T/F
The articles may authorise anything that might otherwise be a breach of statutory duty

A

True

43
Q

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

A

True

44
Q

T/F
Articles may normally permit less onerous regulations than CA 2006

A

False

45
Q

T/F
Some conflicts of interest by independent directors are permissible by the articles

A

True

46
Q

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

A

Yes

47
Q

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

A

No

48
Q

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

A

Yes

49
Q

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

A

Yes

50
Q

a single member limited company must include

A

a statement on its register that there is only one member

51
Q

What is an advantage of a shareholders’ agreement

A

it does not require registration

52
Q

What transactions require members’ approval

A

Service contracts (>2years)
Substantial property transaction
loans and quasi loans
payments for loss of office or on retirement

53
Q

What are substantial property transactions

A

lower of assets exceeding £100,000 or 10% of net assets
there is de minimis value of 5000

54
Q

Failure to obtain approval for payments for loss of office or on retirement will result in

A

the payment being held on trust for the company

55
Q

variation of class rights
holders of ?? of the class shares can apply to the court for cancellation

A

15%

56
Q

Calling meetings
can be requisitioned by holders of usually more than&raquo_space;> companies&raquo_space; with voting rights

A

5% of companies paid up capital

57
Q

notice
of members resolution must be given by the company and requested by members holding???

A

5% of voting rights

58
Q

Share buyback
out of capital (private only) who can apply to court to prohibit

A

any member or creditor

59
Q

registration
of limited company as unlimited who can prevent

A

individual members

60
Q

A member may bring a derivative claim on behalf of the company in respect of

A

an actual or proposed act or omission by a director which involves negligence or breach of duty or default or breach of trust

61
Q

Permission for derivative claim refused if

A

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
Q

Unfairly prejudicial or not?
Payment of excessive bonus and pension contributions

A

Yes

63
Q

Unfairly prejudicial or not?
Diversion of a company’s business to a director-controlled company

A

Yes

64
Q

Unfairly prejudicial or not?
Making inaccurate statement to shareholders

A

Yes

65
Q

Unfairly prejudicial or not?
Improper allotment of shares

A

Yes

66
Q

Unfairly prejudicial or not?
exclusion and removal from the board

A

Yes

67
Q

Unfairly prejudicial or not?
failure by parent to pay debts of sub

A

not

68
Q

Unfairly prejudicial or not?
NON-COMPLIANCE WITH stock exchange rules, city code, and Cadbury code

A

Not

69
Q

Unfairly prejudicial or not?
Failure to increase petitioner’s shareholding

A

Not

70
Q

Unfairly prejudicial or not?
Diversion of the company’s business to a director-controlled company

A

Yes

71
Q

Unfairly prejudicial or not?
failure to call a general meeting

A

Yes

72
Q

Unfairly prejudicial or not?
late presentation of the company’s accounts

A

No - bad management

73
Q

where can orders be made for just and equitable winding up

A

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
Q

Who may call a general meeting (4)

A

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
Q

Specific situation where only public company member meeting called

A

net assets fall to half or less of the called up share capital

76
Q

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

A

21
28

77
Q

Notice of at least xx days must be given of a meeting (unless shorter period of notice agreed)

A

14

78
Q

If meeting called by SH not taking place in time, shareholders may call a meeting to take place within…

A

3 months of the initial request to the directors

79
Q

Short notice requires support of members holding at least

A

90% of the nominal value of shares/voting rights
95% public companies

80
Q

what must be stated in notice to director

A

time
date
place of meeting
general nature of the business to be discussed

81
Q

What is special notice

A

in order to remove director or auditor, shareholders’ must give 28 days notice to the company

82
Q

Failure for public company to hold AGM RENDERS EVERY OFFICER OF THE COMPANY who is in defualt

A

liable to a fine

83
Q

Notice for AGM

A

21 Days unless all members agree to shorter

84
Q

Required holding to place item on agenda of meeting

A

5% or
100 members holding on average £100 each

85
Q

Notice for ordinary resolution

A

14 days

86
Q

Notice for special resolution

A

depends on type
21 AGM
14 normal

87
Q

Votes for an ordinary

A

more than 50%

88
Q

votes for special resolution

A

more than or equal to 75%

89
Q

Do ordinary resolution need to be filed with registrar

A

only for changes to directors and auditors

90
Q

Do special resolution need to be filed with registrar

A

Yes

91
Q

What kind of meeting is used for the following
any business for which a special resolution is not required specifically by enactment or articles

A

ordinary

92
Q

What kind of meeting is used for
liquidations
changes of articles of associations
change in company name

A

Special resolution

93
Q

Can written resolution be used for removal of director or auditor

A

No

94
Q

For general meeting in public company, what percentage of the voting rights is needed for short period notice

A

95%

95
Q

for AGM for public, what percentage of voting needed for short period notice

A

100%

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