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Company Management Flashcards

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1
Q

Which director is normally appointed by ordinary resolution by shareholders?

A

Non-executive director

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2
Q

Which type of directors aren’t formally appointed, and are directed by virtue of conduct?

A

De facto

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3
Q

What happens re directors actions when a directors appointment is void or defective?

A

Nothing, they remain valid

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4
Q

How old can a director be under the companies act 2006?

A

16

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5
Q

What action can be taken on a ordinary resolution with special notice?

A

Removal of director

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6
Q

How much notice is required to be given by a plc for the holding of AGM?

A

21 days

Unless agreed to short notice

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7
Q

What are the procedures around removing an auditor?

A

Ordinary resolution is required with special notice of 28 days (as well as company director)

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8
Q

Who is a director an agent of?

A

Not the members but the company

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9
Q

Do directors have to exercise independent judgment?

A

Yes… not just follow shareholders blindly

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10
Q

What are the criteria to meet a micro, small or medium sized business?

A

Micro
Turnover - £632k or less
Balance sheet - £316k or less
Employees - 10 or less

Small
Turnover - £10.2m
Balance sheet - £5.1m
Employees - 50 or less

Medium
Turnover - £36m or less
Balance sheet - £18m
Employees - 250

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11
Q

Criteria for micro business

A

Micro
Turnover - £632k or less
Balance sheet - £316k or less
Employees - 10 or less

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12
Q

Criteria for small business

A

Small
Turnover - £10.2m
Balance sheet - £5.1m
Employees - 50 or less

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13
Q

What are the audit requirements (not required)?

A
  • insurance or banking companies of any size
  • dormant companies
  • non profit making companies
    Secretary of State will choose auditor by default if not appropriate by directors/members annually by passing an ordinary resolution
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14
Q

What are the company’s secretaries powers?

A

Can bind company on basis of /implied (agency law) but not buyland or borrow money

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15
Q

What is included in a confirmation statement?

A

All companies have to do it

  • registered office
  • if diff, where address of register of members
  • type of company and principal activities
  • shares
  • ceased to be members
  • changes in significant control (3%)

(File within 14 days of anniversary of incorporation)

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16
Q

What is a memorandum of association?

A

Historic record of initial subscribers

Also state that subscribers want to form a company

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17
Q

What is the issue wth company names?

A

If connected to Central or local government. “British/international “require approval from Secretary of State
Limited companies can be omitted if company promotes a profession and profits goes towards it

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18
Q

What is section 9 about?

A

The number of shares, nominal value, amounts paid up (regarding share capital and initial shareholdings)

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19
Q

Why can the court disqualify a director and for how long? (May)

A

Persistent default of the CA (up to 5 years)

OR UP TO 15 YEARS

  • persistent default of CA
  • fraudulent/wrongful trading
  • considered to be in public interest

Breaches competition law

20
Q

When must the court make a disqualification order and for how long?

A

2-15 years

  • if co has become insolvent
  • conduct as director makes him unfit to be concerned in the management of a company
21
Q

What is the liability for shareholders buying shares from another shareholder?

A

Old s/h has to pay premium still

New s/h liabilitiy is limited to NV

22
Q

Where do directors powers’ come from?

A

AoA - they are agents of company not of members

23
Q

What are the powers of directors?

A

They have unrestricted objects besides provisions made by articles

Power is given to board of directors, not individual directors

24
Q

What are the restrictions to directors powers,

A
  • alteration of articles and reduction of capital need SR

- members can exercise control over directors powers by passing a SR to remove directors or alter articles

25
Q

What is a substantial property transaction?

A

Where a director wishes to transfer or acquire property of company
Lower of - assets exceed £100k or 10% of net assets
De minimis vale of £5000 (doesn’t matter)

26
Q

What transactions require members approval?

A
  • Service contracts that last a minimum of two years or more otherwise it will be terminated
  • substantial property ransactions (10% of NA/£100k)
  • loans and quasi loans (besides for minor or ‘normal transactions’, expenditure on company business, regulation, investigation or legal, intragroup transactions and money lending co)
  • payments for loss of office
27
Q

What are exceptions for loans and quasi-loans that require members approval?

A
  • Expenditure on company business, defending proceedings or regulatory action investigation
  • Minor transactions or there is in the ordinary course of business
  • Intra group transaction
  • Money lending companies
28
Q

What is the conclusion on majority rule and minority’s objection?

A

If minority is unhappy with the decision made by the majority, they generally have no say. The company is the proper claimant

29
Q

Must a shareholder who brings a derivative claim on breach of duty/negligence of a director show that the directors control the majority of the cos shares?

A

No

30
Q

What must a shareholder who’s bringing a derivative claim do?

A
  • do a prima facie case (director is doing wrongdoing)

- obtain permission to continue the claim

31
Q

When will permissioncto bring a derivative claim occur?

A
  • hypothetical director acting to promote the success of the company would not continue this claim
  • act has been approved of by shareholders
32
Q

What is the reasonableness test for the UCTA (unfair contract terms act)?

A
  • any attempt to exclude liability the death or personal injury caused by negligence will be void
  • Any attempt to exclude any provisions of the sales of goods act regarding the consumer will be void
  • In a B2B contract - exclusion clause would not be permitted regarding legal ownership. Also they’ll consider (I) the relative bargaining strength of the parties, (ii) inducement was excepted in waiver of their rights, (iii) whether the customer had ought to have had knowledge of the clause
33
Q

What are the rules around allotment of shares with public companies and private companies with multiple classes of shares?

A

FIRST Directors require authority which they get from the passing of OR which is effective for up to 5 years

  • Shares issued only for cash are granted pre-emption rights
  • Shareholders have been notified in writing and it must be open for 21 days (you have 21 days to live)
  • private companies have the option to do disapply pre-emption rights by SR
34
Q

What are the time limits around meetings?

A

Call meeting - director must call meeting within 21 days of members request
Hold meeting - within 28 days of directors request

OTHERWISE members can say it has to be held within 3 months of their initial request

35
Q

What is the procedure in removing a director or auditor

A

OR with special notice of 28 days

36
Q

How much notice needs to be given for meetings? And then for AGMs?

A

14 days at least. Must be agreed by 90% generally (or 95% if demanded by AoA or if PUBLIC CO)

21 days

37
Q

What’s the procedure in placing an item on the agenda of a meeting?

A

5% or 100 members holding an average of £100 of shares each

38
Q

What is the procedure for members voluntary liquidation?

A

1) board meeting of directors giving declaration of solvency (can take max 5 weeks)
2) shareholders meeting - SR to place Co into liquidation but OR to appoint liquidation
3) no need for creditors meeting

39
Q

What is the procedure for creditors voluntary liquidation?

A

1) board meeting –> no declaration of solvency (as insolvent)
2) shareholders meeting - SR to place Co into liquidation but OR to appoint liquidator
3) creditors meeting - provide 7 days notice, advertised in Gazette + 2 local newspapers with details of IP, location of where one can inspect list of creditors
4) hold meeting 14 days from notice, appoint liquidator of creditors choice and 5 reps to liquidation committee
5) liquidator convenes meeting 3m from commencement of wind up to report on transactions

40
Q

If a charge hasn’t been registered, what are the consequences on the validity of the charge?

A

The charge is void against any liquidator, administrator or creditor and the charge holder has the option of demanding immediate repayment

41
Q

Can someone sell their shareholding in a public company?

A

Yes! Shares of the public company are transferable on a recognised stock exchange if the company is listed.

42
Q

How long are the service contracts that require members approval?

A

Service contracts that last a minimum of 2 years or more

43
Q

What are administrators powers regarding charges

A
  • Administrator can sell assets that are floating charges without charges consent
  • Sell assets subject to fixed charge with consent of the court
44
Q

What type of resolution is required for a members voluntary winding up?

A

Ordinary resolution

45
Q

Who makes the declaration of solvency?

A

ONLY DIRECTORS

46
Q

What doesn’t count as a reasonable belief re: whistleblowing ?

A

Suspicion, rumour and hearsay is not sufficient

47
Q

Regarding, non compliance with the Data Protection Act - what is the sanction?

A

Civil liability and a fine

Note: imprisonment is extremely rare

Law (8 decks)

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