Flk1 Flashcards
What is the requirement for the validity of a charge (fixed or floating) created by a company?
Both need to be registered at the companies house within 21 days if creation. Certified copy of charge + fee must be sent.
What is the consequence of not registering a charge created by a company at the Companies House?
Failure to register renders the charge void against a liquidator or administrator of the company and against the company’s other creditors
What is the order of priority in relation to fixed and floating charges created against a company?
Fixed charges over the same asset take priority in date of their creation, so longas they are validly registered at Companies House. Floating charges over the same assets take priority in date of order of their creation, so long as they were validly registered at the companies house. A fixed charge will take priority over a floating charge over the same asset, even if the floating charge was created before the fixed charge.
What are the matters requiring shareholders approval by ordinary resolution?
Appointment of auditors (if there are any)
Appointment or re-appointment of directors
Removal of a director or auditor
Adoption of the annual accounts and the reports of the directors and auditors
A declaration of dividends
Approval of the directors’ decision to allot shares where there is more than one class of shares
Approval of substantial property transactions (SPT) involving directors with a personal interest (that is, the company buys property from or sells property to a director or someone closely connected to a director)
Ratification of a director’s breach of duty
Entering a service contract with a director for more than two years
Making a loan to a director; and
Giving a director a payment for loss of office (essentially, giving a director a gift for leaving office)
When a transaction will constitute substantial property transaction?
If a director buys or sells property to the company for less than £5,000, the transactional is considered de minimis and does not need shareholder approval. If the value of the item purchased or sold is more than £100,000, it is automatically considered an SPT. Between those figures, whether a sale or purchase of property is substantial depends on the value of the company. The transaction will qualify as an SPT if its value exceeds 10% of the company’s net asset value
Only applies to property owned or sold to a director
What are the matters requiring shareholder approval by special resolution?
Most decisions to buy back company shares
Changes to the company’s AoA
Changes to the company’s name
What must be filed with the Companies House in a change of registered office?
A change of Registered Office Address form at Companies House
What must be filed with the Companies House in a change of accounting reference date?
A change of accounting reference dare form
What must be filed with the Companies House upon appointment of directors?
File an appointment of Director form at Companies House within 14 days
What must be filed with the Companies House if directors are removed?
File a termination of appointment of director form at companies house within 14 days
What must be filed with the Companies House following an issuance of new shares?
File a return of allotment of Shares form at Companies House within 1 month and any necessary shareholders’ resolutions within 15 days.
What must be filed with the Companies House following a change in the articles?
Special resolution and new articles within 15 days
What must be filed with the Companies House following a change in the company’s registered name?
Special resolution, change your company name by resolution form, and fee.
When a preference arises in liquidation?
When a debtor does something that puts a creditor, surety or guarantor in a better position on liquidation or administration other than they would have been if the event had not occurred.
The company or individual must have desired to prefer the creditor, surety or guarantor of the company.
The desire is presumed if the preference is in favour of a connected person (director, their spouse or other close family member or an associate of the bankrupt)
What is the period of time that is relevant for preference in liquidation?
If it happens within six months of the onset if insolvency or two years if made to a connected person
- company compulsory liquidation: date of presentation of the petition
- CVL : date the company enters liquidation
- Administration: it is the date the company files a Notice of Intention to Appoint an Administrator or the date when it enters administration, whichever is earliest.
- For an individual, it is the presentation of the bankruptcy petition
When a transaction at undervalue arises?
Property that would have otherwise been part of the bankruptcy estate was given as a gift or was sold for significantly less than market value within two years of a company’s insolvency or five years of an individual’s bankruptcy
What is the insolvency requirement that applies to undervalue transactions?
Company - it must have been insolvent at the time of the transaction or become so as a result. There is a presumption of insolvency if the transaction is to a connected person
Individual - There is no requirement to prove the debtor was insolvent at the time the transaction was made if it was made within two years before the petition but insolvency is presumed if the transaction was made at any time in favour of a close relative or business associate.
Is there a defence to the accusation of transaction at undervalue?
Yes. Transaction was entered into in good faith, for the purpose of carrying in the business and when it was made there were reasonable grounds for believing it would benefit the company
When is a floating charge automatically void?
It the floating charge was created:
- For no consideration within 12 months ending with the onset if insolvency (or two years for a connected person); and
- at a time the company was insolvent or became insolvent as a result if the charge was given to a person unconnected to the company. However, there is no requirement to show insolvency if the floating charge is to a connected person.
What is the liquidator duty in relation to assets subject to floating lien?
Must set aside parts of the assets subject to a floating lien for the benefit of unsecured creditors
50% on the first £10,000 in the value of the property
20% on amounts above, up to a maximum ring-fenced fund of £800,000
What is the historic test to determine liability for VAT?
The business must determine whether the turnover for the past 12 months exceeds £85000. The business must notify HRMC within 30 of reaching the threshold
What are the rules for basic tax point?
Normally the time the goods are made available.
However, if the goods are paid for before that date, the payment date will be used.
If VAT invoice is issued within 14 days after the basic tax point, that date will be used