Formation of a company Flashcards
Memorandum of a company
declaration on the part of the company’s subscribers (the first members of the company) that they wish to form a company and agree to become members of that company
CA 1985 Included object’s clause of the business - the company couldn’t act outside of that purpose/object
CA 2006 - unrestricted objects (unless specifically restricted in AA)
Purpose of AA
to regulate the relationship between the shareholders, the directors and the company
AA - legality test
Legality test: aa must comply with minimum provisions of CA 2006 but can set higher standards in their tailor made AAs
What resolution is need to amend AA?
special resolution
Shareholders agreement
If a member is likely to wish to enforce rights against other members, he/she should be advised to enter into a shareholders’ agreement. A shareholders’ agreement is a private agreement between the shareholders which is enforceable as a contract between the members.
Incorporation from scratch - documents
Copy of the company’s memorandum
Articles (unless MA wish to be used)
Fee
Form IN01 (application for registration)
When does a company become a legal entity?
The company becomes a legal entity from the date on which the certificate of incorporation is issued by CH
What resolution is needed to change a name? + when is a change of name effective
Special resolution
A new company name becomes effective from the date on which the new certificate of incorporation on change of name is issued by the Registrar of Companies (note that company’s number never changes)
Who is liable for pre-incorporation contracts?
pre-incorporation contracts enforceable as personal contracts against the persons purporting to act on the company’s behalf (known as ‘promoters’)
Who is responsible for a day-to-day management of the company?
Directors
How to pass a resolution at a board meeting?
Board resolution at a board meeting
Each director has 1 vote
Board resolutions are passed by simple majority (MA 7) unless the directors have agreed that a particular decision requires unanimity
if all of the directors are in agreement with a decision, they can also pass a written Board Resolution which means the directors don’t have to waste time attending Board Meetings
Ordinary resolution
over 50% of votes
Special resolution
75% or more of votes
Show of hands
each shareholder has one vote
Poll vote
one vote per share held by a shareholder
Who can demand a poll vote?
Who can demand a poll vote?
The chairperson of the meeting;
The directors;
Two or more persons having the right to vote on the resolution; or
A person or persons representing at least 10% of the total voting rights of all the shareholders entitled to vote on the resolution
Can public companies use a written resolution method?
NO (its only for private companies)
What decisions can NOT be based by written resolution?
Removal of a director
Removal of an auditor
When does a written resolution lapse?
If the company does not receive a sufficient number of responses to pass the WR, it will lapse. For a company with MA, the lapse date is 28 days beginning with the circulation date.
BOARD MEETING
Who calls a BM?
Notice?
Quorum?
Voting?
Who calls a BM? - a director or require the company secretary to do this
Notice? - reasonable notice
Quorum? - 2 directors
Voting? - each director has 1 vote (chair has a decisive vote if there’s deadlock)
GENERAL MEETING
Who call a GM?
Notice?
Quorum?
Who call a GM? - the board
Notice? - 14 clear days
Quorum? - 2 shareholders
Who can shorten the notice for the General Meeting?
a majority in number of the members who,
together hold shares with a nominal value of not less than 90% of the total nominal value of the shares which give the right to attend and vote at the GM
