Formation of a company Flashcards
Which of the following statements correctly describes the legal effect of the articles of a company?
(a)
The Articles take effect as a contract between the company and its members. Members will only be able to enforce provisions contained in Articles against other members through the company itself.
(b)
The Articles take effect as a contract between the members themselves in their personal capacities. Members are able to enforce the provisions of the Articles both against the company and directly against other members.
(c)
The Articles take effect as a contract between the company and its members. Members are able to enforce the provisions of the Articles both against the company and directly against other members.
(d)
The Articles take effect as a contract between the members themselves in their personal capacities and therefore members may enforce provisions contained in the Articles directly against other members.
(a) The Articles take effect as a contract between the company and its members. Members will only be able to enforce provisions contained in Articles against other members through the company itself.
You are advising a client about incorporating a limited company.
Which of the following statement about the constitution of the company is correct?
(a)
The client will not need a memorandum of association to incorporate a company.
(b)
The newly incorporated company will have unrestricted objects unless the client chooses to restrict them.
(c)
The main constitutional documents will be the memorandum.
(d)
If there is a conflict between the Articles of Association and the CA 2006, the Articles of Association will prevail.
(b) The newly incorporated company will have unrestricted objects unless the client chooses to restrict them.
A company was incorporated in 2010. Which of the following statements about the company’s memorandum is correct?
(a)
The memorandum is a constitutional document. It will include an objects clause setting out the purposes for which the company has been formed. Any acts outside the scope of the objects clause are said to be ultra vires.
(b)
The memorandum has no constitutional significance but it is required to be filed on incorporation. It simply amounts to a declaration on the part of the company’s subscribers that they wish to form a company and agree to become members of that company.
(c)
Since this company was incorporated in 2010, it would not have required a memorandum.
(b) The memorandum has no constitutional significance but it is required to be filed on incorporation. It simply amounts to a declaration on the part of the company’s subscribers that they wish to form a company and agree to become members of that company.
Your client wishes to incorporate from scratch a new company, which will have unamended Model Articles. Which one of the following correctly describes the documents that will need to be filed at Companies House?
(a)
The memorandum, fee, the company’s Articles and Form IN01.
(b)
The fee and Form IN01.
(c)
The memorandum, fee, Model Articles and Form IN01.
(d)
The memorandum, fee and Form IN01.
(e)
The fee, Model Articles and Form IN01.
(d) The memorandum, fee and Form IN01.
You are advising a client on a shelf company conversion. As part of the conversion, the client wishes to change the name of the company. The company has unamended Model Articles.
Which one of the following statements about the company name is correct?
(a)
The new name will be effective once the Registrar of Companies issues a new certificate of incorporation.
(b)
The Directors can change the name themselves once they are appointed to the Board.
(c)
The company requires an ordinary resolution to change the name of the company.
(d)
The new name will be effective once the correct form has been submitted to Companies House.
(e)
The new name will be effective once the Company votes to change the name.
(a) The new name will be effective once the Registrar of Companies issues a new certificate of incorporation.
You are instructed to convert a shelf company PP123 Limited for your client. The one issued share will be transferred to your client WYX Plc and your client plans to appoint 2 directors from its own board to the board of the shelf company.
Which one of the following statements about the conversion is correct?
(a)
The current directors should resign before the new directors are appointed to ensure a clean break.
(b)
PP123 Limited will be a separate legal entity after the conversion.
(c)
Your client will control PP123 Limited once its shareholding is paid for.
(d)
Your client will control PP123 Limited once it is entered on the register of members.
(e)
Your client will control PP123 Limited once the share transfer is registered at Companies House.
(d) Your client will control PP123 Limited once it is entered on the register of members.
Who can be liable under pre-incorporation contracts?
s. 51 CA 2006: protects third parties who believe are entering into contract with co which is incorporated and registered by making pre-incorporation contracts enforceable as personal contracts against persons purporting to act on co’s behalf
They are called ‘promoters’ and can be held personally liable
A company has unamended model articles and 4 shareholders with the following shareholdings:
A - 500 (50%)
B - 250 (25%)
C - 150 (15%)
D - 100 (10%)
The company wishes to shareholders to pass a special resolution using the written resolution procedure.
Which of the following statements is correct advice regarding the procedure?
(a)
If one of the shareholders doesn’t vote for 21 days because they miss the email, it will be too late to vote for the resolution as the written resolution will have lapsed.
(b)
The special resolution can only be passed if 3 of the 4 shareholders vote in favour.
(c)
A and B can pass the special resolution alone.
(d)
If C and D abstain, their votes won’t count.
(e)
All shareholders must unanimously consent to the written resolution.
(c) A and B can pass the special resolution alone.
A company has unamended model articles and 4 shareholders with the following shareholdings:
A - 500 (50%)
B - 250 (25%)
C - 150 (15%)
D - 100 (10%)
The company wishes to shareholders to pass an ordinary resolution at a General Meeting. All shareholders will attend the meeting and vote.
Which of the following statements is correct advice regarding the procedure?
(a)
If B, C and D all vote in favour of the ordinary resolution, it will be passed despite A voting against it.
(b)
A can pass the ordinary resolution alone.
(c)
If A is not in favour of the resolution, it cannot be passed.
(d) The ordinary resolution can only be passed if 3 of the 4 shareholders vote in favour.
(c) If A is not in favour of the resolution, it cannot be passed.
Explanation: A holds 50% of the shares therefore can call a poll vote and is able to block the ordinary resolution (since more than 50% is required to pass).
A company has unamended model articles and 4 shareholders with the following shareholdings:
A - 500 (50%)
B - 250 (25%)
C - 150 (15%)
D - 100 (10%)
The company wishes to shareholders to pass a special resolution at a General Meeting. All shareholders will attend the meeting and vote.
Which of the following statements is the correct advice regarding the procedure?
(a)
The special resolution can be passed if any 3 of the 4 shareholders vote in favour.
(b)
If B votes against the special resolution, it cannot be passed.
(c)
The special resolution may be passed by A and B alone.
(d)
A, B and either C or D will need to vote in favour for the special resolution to be passed.
(c) The special resolution may be passed by A and B alone.
Who has a right to demand a poll vote under s. 321?
- Chairperson of the meeting
- Directors
- Two or more persons having right to vote on resolution; or
- Person(s) representing at least 10% of total voting rights of all shareholders entitled to vote on that resolution
True or false: all companies can pass shareholder resolutions by way of the written resolution procedure.
False: only private companies may pass shareholder resolutions by way of the written resolution procedure
True or false: in a poll vote, each shareholder presents holds one vote.
False: they hold one vote in respect of each share held by them
True or false: abstaining in written resolutions counts as voting against the resolution.
True.
True or false: in the written resolution procedure, each member has one vote in respect of each share held by them.
True.
