Gaps

Question 1

What is a body corporate

Answer 1

This means it is incorporated

Separate legal personality

Question 2

Do directors need permission to allot shares?

Answer 2

Directors of private companies incorporated with model articles have automatic authority to allot shares- S550 CA

Question 3

When a company’s stock is sold by a shareholder to a new shareholder, what must the company do

Answer 3

Issue share certificate within two months of registration
May refuse to register shares
If they own more than 25% (not 25% but MORE THAN) then update PSC register

Question 4

Who is entitled to receive a copy of a written resolution

Answer 4

Directors, members and auditors

Question 5

Are written resolution records and general minutes to be kept in the same way

Answer 5

Yes

Question 6

How are profits and losses shared in a partnership

Answer 6

Equally unless agreement to the contrary - S24(1) PA1890

Question 7

How can a partnership be ended

Answer 7

A partnership at will can be brought to end immediately by giving notice

Question 8

Liabilities of a new partner

Answer 8

A new partner does not become liable for anything done by the partnership before becoming a partner

Question 9

How to authorise a loan to a director

Answer 9

A loan to a director will not always need a resolution of the members it depends on the amount of the loan and other factors in S204 CA

Question 10

Who decides whether to purchase machinery

Answer 10

The directors

Question 11

Who authorises a substantial property transaction

Answer 11

Ordinary shareholder resolution

Question 12

What is a substantial property transaction?

Answer 12

1. a non-cash asset
2. from a director, director of holding company or person connected with such a director.
3. Over £100,000 OR over 10% of the company’s asset value and is more than £5000

Question 13

How to register a share transfer

Answer 13

A directors board resolution

Question 14

Does a shareholder need permission to transfer their shares

Answer 14

No

Question 15

Is a stamped instrument of transfer needed for stock transfer

Answer 15

Not if the sale proscenium is £1000 or less

No signature is needed if the shares are full paid

Question 16

How to expel a partner

Answer 16

They must all agree including the partner that the others want to expel

Question 17

How to calculate net current assets

Answer 17

Subtract current liabilities from current assets

Question 18

How to calculate net assets

Answer 18

Subtract current liabilities and long term liabilities from fixed and current assets

Question 19

Difference between profit and loss reserve and net profit entry

Answer 19

Profit and loss reserve is the cumulative profit since the business started trading whereas the net profit entry shows only profit from the current financial year

Question 20

Liability of partners in an LLP

Answer 20

Partners in an LLP do not have any personal liability for the LLPs debts

Question 21

Can a company be liable for fraudulent or wrongful trading

Answer 21

No, only a director can

Question 22

What kind of resolution is needed to buy back shares out of capital

Answer 22

Ordinary and special shareholder resolution - s693,694,709 and 716 CA

Question 23

What documents should be filed at CH after the members authorise a buy back out of capital

Answer 23

Copy of resolution authorising buyback with capital
Statement of solvency 
Auditors report 
SH03 
SH06 
Statement of capital

Question 24

What if the votes for and against a board resolution are equal

Answer 24

MA13(1) allows chair of the board or directors to use casting vote to achieve simple majority

Question 25

When is a written resolution passed

Answer 25

As soon as the required majority of eligible member have signified their agreement (50 or 75%) even if not all members have returned their resolution

Question 26

When must a written resolution be passed by

Answer 26

28 days after circulation date

Start counting on day of distribution so if sent on 1st of month it ends on 28th. The day it is sent is day one of 28

Question 27

When should a member be registered on a PSC register (person with significant control)

Answer 27

If they have over 25%

OVER so not included if you have 25%

Question 28

What is a non-executive director?

Answer 28

A member of the board of directors but not a member of the executive management team. Not employees of the company but may get a fee. Independence. Vote at the board meetings but do not involve themselves with day to day management.

Question 29

Legal duties of non-executive directors

Answer 29

The same as executive directors

Question 30

What is an executive director

Answer 30

A member of the board who is also an employee with a senior role in managing the company.

Question 31

What can the holder of a non-voting share do?

Answer 31

Entitled to a portion of the company’s capital but is not able to take part in general meetings. Cannot vote. E.g. preference shares are often non-voting

Question 32

what is the company’s asset value (regarding substantial property transactions)

Answer 32

Either

1. the value of the company’s net assets determined by most recent statutory accounts OR
2. if no statutory accounts then the amount of the company’s called up share capital.

Question 33

What happens if a substantial property transaction is not authorised

Answer 33

it might be recinded but this might not always be possible.

Question 34

What is called-up share capital

Answer 34

The amount of share capital shareholders owe, but have not paid

Question 35

What is paid-up share capital

Answer 35

Any amount of money that has already been paid by investors in exchange for shares of stock