From DA Flashcards
What do you need to change a company’s name?
CA says special resolution. But, the company’s AoA will override.
To amend AoA, what is always needed?
A special resolution.
In general meetings can the chair vote to interrupt a deadlock?
No. Only the chair at a board meeting (for directors bascially can).
What should a fixed charge be allowed on when a company wants a loan?
Only on fixed things - e.g., machinery, not assets that the company needs to move around or deal with often, as they will need the bank’s permission every time they do.
A fixed charge gives the lender control over that asset. A floating charge allows the opposite: as stock will be moved around, this is acceptable to the borrower as they can use it for day to day stuff. Borrower maintains control and in some instances, this is how they can grow their company.
Usually: floating charge is placed on company stocks and this is acceptable as stocks can be moved around freely.
What to do if a general meeting needs to be held at short notice? What percent of consent is needed?
According to the unamended Model Articles, for a company to issue short notice for a general meeting, it must obtain the consent of a majority of shareholders who hold at least 90% of the total voting rights of the company.
Can companies make amendments to their AoA to do the following:
+Change the procedure of removing an auditor or director
No. Both must only be removed by ordinary resolution.
Can companies remove the Bushell v Faith clause where the director has two votes for every share rather than one as usual where they are a shareholder-director and the company wants them removed?
Yes.
Do all shareholders need to be present at a general meeting in order to pass a resolution?
NO.
For example, for an ordinary resolution, you only need more than 50% of votes in favour of X of the shareholders present at the meeting.
When a shareholder cannot attend a general meeting themselves, can they send a proxy? Yes. But can they send another shareholder as a proxy for them as well?
Also yes.
When a director is receiving gifts from a client, this is a breach of their duty to not receive gifts etc… what can be done?
His breach can be ratified.
The shareholders of the company need to ratify this breach by ORDINARY RESOLUTION. This is what the MA dictates.
If something requires a Substancial Property Transaction what does this mean?
Purchase is above £100,000 or is above £5,000 and more than 10% of the company’s value.
Also, property = non-cash asset.
If something requires a Substancial Property Transaction where director will have person interest, what must be done to allow it to happen?
Ordinary resolution
What must be done for a purchase of a director’s stock in another company that is not a Substancial Property Transaction ?
Board resolution or written resolution is good enough + s177 (personal interest) declaration to be made.
Also, by unanimous consent.
What is a s 303 notice?
After a section 303 notice is sent to the board, if the directors do not call a general meeting within 21 days, the shareholders who sent the notice or those representing more than half the voting rights of all of them, can call one.
What does the PA say about partnerships and it coming to an end?
Under PA 1890, any partner can dissolve a partnership at will by serving notice on the other parties. THIS CAN BE CHANGED BY USING EXPRESS PROVISIONS: Express provisions setting out how the partnership should come to an end .
In a partnership, what happens when one partner enters into a contract (such as purchasing machinery) for the partnerhip without the other partners’ involvement or approval?
Under the Partnership Act 1890, when a partner enters into a contract within the scope of the partnership’s business, all partners are jointly and severally liable for the obligations incurred, even if some partners were unaware or did not consent to the specific transaction (you can have implied authority and bind the firm under s5).
It can also be bound when a partner acts with “apparent” authority, meaning the contract is one which the partner would be reasonably expected to enter into and the counterparty didn’t know the partner was acting without authority.
What should an unsecured creditor do if they have not received the money due to them by a company and the company is flopping?
Serve a statutory demand, wait three weeks then lodge a wind-up petition at court to have the company liquidated.
An unsecured creditor with a debt exceeding £750 can serve a statutory demand on the debtor.
They need to act quickly as it looks like the company is selling its assets and trying to wrap itself up. A liquidator will be able to claw back any assets that are disposed of incorrectly and take action against the directors if necessary. Why not an administrator? An administrator has similar powers to a liquidator, but the role of administrator is slightly different, in that they have their “cascading duties” to first try and rescue the company if possible. This is inappropriate here, and the court process to appoint an administrator is lengthier than a wind-up petition.
If all the directors are in different countries and a board resolution is needed to make a decision, such as about a loan, what can be done?
Under the Model Articles, the unanimous written resolution procedure can be used by the board rather than holding a board meeting.
What are s 169 rights?
How could a shareholder get more protection?
The Companies Act 2006 does give some protections to shareholders, such as information rights, but these are limited. A minority shareholder should try and negotiate rights under a shareholders’ agreement and further rights (such as weighted voting rights) under the articles of association.
What take priority between fixed and floating charges?
Fixed takes priority - no matter when they were created