Formation Of A Company Flashcards
What is the key statute governing company law?
Companies Act 2006
What constitutional documents were required under the CA 1985?
The articles of association and the memorandum
Under s16 CA 2006, what is the memorandum required for?
Required as part of procedure to register company at Companies House
What is a memorandum under CA 2006?
Declaration on the part of the company’s subscribers that they wish to form a company and agree to become members of that company
What was a memorandum under CA 1985?
Set out the purposes for which the company had been formed. Acting outside of this purpose was described as acting ‘ultra vires’. Now companies have unrestricted objects, unless specifically restricted in the company’s articles.
What is the purpose of the articles of association?
Regulate the relationship between shareholders, directors, and the company
What is the legality test in relation to articles of association?
The articles must comply with the minus provisions
What is an example of a provision in the CA 2006 that cannot be overridden by the company’s articles?
S.321 the right to demand a poll vote at a GM – this cannot be removed or varied
What are the three choices for the form of articles?
Model articles, Amended MA, Tailor-made articles
How can a company amend articles once they have been adopted?
Can alter at any time in the future by special resolution - basic rule is that to be valid any alteration must be made bona fide in the interest of the company as a whole
Are the company’s articles binding and enforceable on both the company and its members?
Yes
Can members enforce rights contained under the articles against other members?
No. Generally members will only be able to enforce provisions contained in the articles through the company itself
What are the two methods of forming a company?
Incorporation from scratch, Shelf company conversion
What must be delivered to Companies House to incorporate a company from scratch?
Copy of the company’s memorandum, Articles (if the company does not intend to use the MA), The fee (higher fee for same day incorporation), An application for registration form (IN01)
What does an application for registration form (IN01) contain?
Company’s proposed name and registered office, Whether the company is to be public or private, The company’s registered appropriate email address, Whether the company is to be limited by shares or guarantee, A statement of the company’s proposed officers and persons with significant control, A statement of compliance, A statement of lawful purpose
What is set out in the certificate of incorporation?
The name of the company, The company’s registered number (this will never change), The date of incorporation
When does a company become a legal entity?
The date on which the certificate of incorporation is issued by Companies House
What is a shelf company?
A shelf company is one that has been set up in advance by a company registration agent or law stationer. It is incorporated by inactive
What changes are likely to be made to the shelf company?
Name - MA, can be changed by special resolution of the company’s shareholders, Registered office, Articles - MA, articles can be amended by special resolution, New directors and company secretary (if there is one) to be appointed, Original directors and company secretary (if there is one) to resign, Shares held by the subscribers to be transferred using stock transfer form.
What needs to be filed at Companies House when changing a company’s name?
Form NM01, The special resolution, The fee
What needs to be filed at Companies House when changing a company’s registered office?
Form AD01
What needs to be filed at Companies House when amending articles?
The amended articles and the special resolution
When transferring shares to new members when converting a shelf company, when does the new member become the shareholder?
Once it is entered on the register of members
What forms are required to be filed at Companies House on the appointment of a new director/secretary?
AP01 - Directors, AP03 - Secretary
What forms are required to be filed at Companies House on the resignation of a director/secretary?
TM01 - Directors, TM02 - Secretary
What are some of the legal and commercial considerations when choosing a name?
Can’t be offensive, Must end in limited/ltd for private limited company, Must obtain approval if it suggests a ‘connection with government or public authority, Must not be the same as another on the index of company names, Gives a misleading indication of its activities
When is a new company name effective?
From the date on which the new certificate of incorporation on change of name is issued by the registration of companies
Who are pre-incorporation contracts enforceable against?
Enforceable against the person purporting to act on the company’s behalf. They will be personally liable
How are decisions of directors taken?
By passing a board resolution and board meetings
How are board resolutions passed?
By simple majority. Each director has one vote.
How are shareholder decisions taken?
By passing shareholder resolutions
How can shareholder resolutions be passed?
At a meeting of the shareholders (general meeting) OR In writing (for private companies only)
What are the two different types of shareholder resolution?
Ordinary resolution - passed by simple majority (over 50%), Special resolution - passed by a majority of 75% or more
How many votes are shareholders entitled to on a show of hands?
1 vote each
How many votes are shareholders entitled to when using a poll?
Every shareholder has one vote in respect of each share held
Are shareholders able to appoint a proxy?
Yes - the proxy can exercise their right to vote
When can a poll vote be demanded?
In advance of the GM, at the GM before the show of hands, or at the GM immediately after the result of the vote
Who can demand a poll?
The chairman, The directors, Two or more persons having the right to vote on the resolution, A person or persons representing at least 10% of the total voting rights of all the shareholders entitled to vote on the resolution
When voting on written resolutions, how many votes do members have?
One vote in respect of each share held by them
What are the two types of written resolution?
Written ordinary resolution - passed by a simple majority of the total voting rights of eligible members, Written special resolution: must state it is a special resolution, and passed by a majority of members representing not less than 75% of the total voting rights of eligible members
What are the two decisions that may not be passed as written resolutions?
Removal of a director, Removal of an auditor
On written resolution, what does abstaining count as?
Voting against
Who can call a board meeting?
Any director or require the company secretary to do so at any time
What notice is required for calling a board meeting?
Reasonable notice. Decided by whatever is usual for that company
What is the quorum required for a board meeting?
MA require a minimum of two directors
Who calls a general meeting?
The board
What is the notice required for a general meeting?
14 days notice. The clear day rules apply - therefore day of calling and day of notice are excluded. If notice is posted or emailed deemed to be served 48 hours after sending
What is the quorum for a general meeting?
Generally two shareholders, but one shareholder for single member companies
What is the usual sequence of company meetings where a shareholder vote is required?
BM - GM - BM - PMM
When can a general meeting be called at short notice?
If sufficient members agree: a majority in number of the members who, together hold shares with a nominal value of not less than 90%
What is a summary of the sequence of company meetings for short notice GM?
What is a summary of the sequence of company meetings for decision to be made by written resolution?
What three categories can the post-meeting matters be broken down into?
Internal - minutes of all meetings to be kept for 10 years and updating statutory books e.g. registers of members, Filings at Companies House - all special resolutions must be filed. Amended articles must be filed and change of names forms, Record keeping - e.g. directors service contracts need to be kept at the registered office
Does notice of a general meeting need to describe in sufficient detail the business to be transacted?
Yes - members need to decide whether they wish to attend. If a special resolution is proposed the notice must set out the text of the resolution.
