Exam Questions and Answers Flashcards
In respect of a listed company, identify how often the company must undertake a tender for the external auditor and explain what the maximum period of engagement for the external auditor is?
A listed company must undertake a tender for their external audit services at least every ten years (Audit Regulations 2016) The maximum period of engagement for the external auditor is 20 years, provided a tender has been held in the last 10 years. The FRC and equivalent bodies in other EU jurisdictions have the discretion, in exceptional circumstances to grant a maximum two-year extension to the retendering and/or rotation period- FRC Notes of best Practice 2017. Audit Committees are required to disclose in their annual report that a tender is taking place as they are the ultimate clients of a statutory audit.
How to disapply pre-emption rights?
Companies may permanently disapply pre-emption by excluding such rights in their Articles of Association (this will require a variation of the Articles). Alternatively, the rights may be excluded for a specific duration by special resolution of the members. It is usual for listed companies to request an annual waiver at each AGM for up to 10% of the issued share capital, subject to a rolling limit of 7.5% over three years.
Other than the business of the meeting, list six types of information that are considered good practice to include in the minutes of a Board meeting?
- Company name and registered number
- Place, date and time of the meeting
- Directors and other attendees
- Confirmation of the meeting’s Chair
- Confirmation that a quorum was present
- Declaration of any conflicts of interest
- Time meeting closed
- Signature block for the Chair to sign the minutes
In respect of a director’s address, explain with supporting reasons what information: · must be provided to the Registrar of Companies; and · is visible by the public
A director must provide their residential address to the Registrar of Companies, in case the Registrar needs to contact them at the home address. However, in order to provide protection from fraud and potential harassment of the director, it is usual to provide a service address to the Registrar of Companies, which typically is the company’s registered office address – it is only the service address which is visible to the public.
Following an amendment to the Articles of Association, state what documents must be filed at the Registrar of Companies and what the applicable timescale is.
The following must be filed with the Registrar of Companies within 15 days of the passing of a special resolution: a signed copy of the special resolution; and the amended Articles of Association. It remains a criminal offence if a company does not file an amended copy of its articles with Companies House within 15 days after the amendment takes effect. In addition, Companies House has the power to impose a fine of £200 for failure to file amended articles.
In respect of a listed company, explain why and how often a listed company must seek approval for its Remuneration Policy.
A listed company may only pay its directors’ remuneration in accordance with a Remuneration Policy. The Remuneration Policy must be put to the vote at a general meeting at least once every three years and at any time a change to the Policy is proposed. The vote is binding upon the company in respect of directors’ remuneration. Companies will also have to produce an annual implementation report on how the approved pay policy has been implemented, including a single figure for the total pay directors received that year. This will allow shareholders to make comparisons year-on year and between companies. Shareholders will also have an annual advisory vote on a resolution to approve the implementation report. If a company fails to pass this resolution in a year in which the remuneration policy was not put to a shareholder resolution, this will trigger the need for the company to put the remuneration policy to shareholders the following year.
Process required during the Resignation of a Company Secretary?
- The resignation must be entered in the company’s register of directors and secretaries and notified to the Registrar of Companies on the appropriate form (Form TM02) within 14 days of the resignation (s276/7 Companies Act 2006).
- Private companies may have chosen to maintain the register of secretaries on the central register held at Companies House in which case the CA 2006 provides that the notification to Companies House will also serve to update the central register.
