Drafting - Business Topics

Question 1

How will people attending a board meeting be referred to?

Answer 1

1. Anyone entitled to take part in the meeting will be recorded as ‘present’
2. Anyone who is at the meeting but not taking part is shown as ‘in attendance’

Question 2

What areas need to be considered if looking at board of directors’ meeting?

Answer 2

1. Who will be there?
2. Notice
3. Quorum
4. Voting
5. Declaration of personal interest (and impact on quorum/voting)
6. A statement that any proposed directors would promote the business of the company,
7. Directors’ resolutions
8. Administration required as follow-up to meeting

Question 3

What areas need to be considered if looking at shareholders’ meetings and resolutions?

Answer 3

General meeting:
i. notice/consent to short notice,
ii. quorum
iii. resolutions
iv. voting

OR
Written resolution
i. circulation
ii. contents - ordinary and/or special resolution(s_
iii. voting
iv. lapse date

Question 4

What meetings and resolutions are required when awarding a service contract to a director for more than 2 years?

Answer 4

1. Board meeting 1 and resolution to approve service contract + give instructions regarding memo of contract
2. GM/written resolution and ordinary resolution to approve term of service contract
3. Board meeting 2 (or reconvene) and resolve to enter contract and authorise director(s) to sign contract on behalf of company

Question 5

What administration/filing requirements are there when awarding a service contract to a director for more than 2 years?

Answer 5

1. Memo of the contract must be at the registered office for 15 days prior to the GM, or circulated with written resolution
2. Copy of executed contract must be kept at registered office until 12 months after expiry

Question 6

What is the consequence of failing to obtain shareholders’ approval when awarding a service contract of longer than 2 years to a director?

Answer 6

Term of service contract replaced with reasonable notice required to remove a director

Question 7

When will a substantial property transaction require shareholder approval ?

Answer 7

If the company acquires from or transfers to a director or connected person a non-cash asset worth:

1. more than £5,000 and also 10% or more of the net asset value of the company, or
2. more than £100,000

Question 8

What meetings and resolutions are required for a substantial property transaction?

Answer 8

1. Board meeting 1 and resolution to approve the contract
2. GM/written resolution and ordinary resolution to approve the contract
3. Board meeting 2 and resolution to enter into contract and authorise director(s) to sign contract on behalf of company

Question 9

What is the consequence of failing to obtain shareholders’ approval for a substantial property transaction?

Answer 9

Transaction voidable at the election of the company, unless transaction affirmed by ordinary resolution within a reasonable period.

Any director who authorised transaction + director who entered transaction must account to the company for any gain they make, and indemnify the company for any loss it suffers

Question 10

When does a loan to a director need special approval?

Answer 10

A loan to a director, or guarantee or security provided in connection with a loan made by any person to a director over the value of £10,000

Question 11

What meetings and resolutions are required for a loan to a director?

Answer 11

1. Board meeting 1 and resolution to approve contract and give instructions regarding memo of contract.
2. GM/written resolution + ordinary resolution to approve contract
3. Board meeting 2 (or reconvene) and resolution to enter contract and authorise director(s) to sign contract on behalf of company

Question 12

What administration/filing is required for a loan to a director?

Answer 12

Memo stating nature of transaction, amount of loan and purpose and extent of company’s liability must be at the registered office for 15 days prior to GM or circulated with written resolution.

Question 13

What is the consequence of failure to obtain shareholders’ approval for a loan to a director?

Answer 13

1. Transaction voidable at the election of the company, unless affirmed by ordinary resolution within a reasonable period.
2. Any director who authorised transaction + director who entered transaction must account to the company for any gain they make, and indemnify the company for any loss it suffers.

Question 14

What administrative matters would be covered in the minutes following appointment of a new director?

How would it be written?

Answer 14

The Chair instructed the company secretary to file Form AP01 - Notice of Appointment of Director with the Registrar of Companies.

It was further resolved that the company secretary be instructed to file a copy of the minutes of this meeting in the Company’s records and to update the following:

register of directors, and
register of directors’ residential addresses