Introduction To Companies Flashcards
What are the main restrictions on a company’s name?
- Must end with plc or ltd (s.58 and 59)
- Cannot constitute a criminal offence or be offensive (s.53)
- Cannot suggest a connection with government or public authority (s.54)
- If it contains a sensitive word or expression, must obtain approval from Secretary of State (s.55)
- Cannot be the same as (s.66) or too similar to (s.67) another company name
What is the procedure plan for changing a company’s name?
Procedure plan:
- Board meeting: propose the resolution
- General meeting: pass special resolution (s.77(1))
- Board meeting: inform directors of result and authorise post-meeting matters
- Post-meeting matters: file NM01 along with copy of the resolution within 15 days (s.30(1)).
When does a change of company name become effective?
When the certificate of incorporation on change of name has been issued - s.81(1).
What must a company’s annual accounts and reports consist of?
- Annual accounts and notes
- Directors’ report
- Strategic report
- Auditor’s report
For large private companies - also a corporate governance statement
How can a company change its ARD?
Make the decision by board resolution.
Give notice to the Registrar on the appropriate form
How is an auditor appointed?
By board resolution - s.485(3)
What are the directors’ common law fiduciary duties that still remain?
- Duty to account for secret profit
- Duty of confidence
What are a director’s statutory duties?
- Act within powers (s.171)
- Promote the success of the company for the benefit of the members as a whole (s.172)
- Exercise independent judgment (s.173)
- Exercise reasonable care, skill and diligence (s.174)
- Avoid a situation where he has an interest which conflicts with the company (s.175)
- Not to accept benefits from third parties (s.176)
- Declare any interest in a proposed transaction with the company (s.177)
How can directors ensure they are not breaching their duty under s.172?
Explicitly state on board minutes how the directors are considering the stakeholder factors when making decisions.
Can also be described in the strategic report.
Large companies must include detailed ‘section 172(1) statements’ (s.414CZA)
What is the test for assessing a director’s conduct under s.174?
The standard is that expected from a reasonably diligent person with both:
- The general knowledge, skill and experience that may reasonably be expected of a director (objective); and
- The general knowledge, skill and experience that the director actually has (subjective)
How can the actions of directors be ratified?
By ordinary resolution of the shareholders - s.239.
Cannot ratify unlawful acts.
What are the remedies for breach of duty?
‘The same as would apply’ under common law - s.178.
Damages and treating the transaction as voidable are available for all duties except s.174 (only damages).
Injunctive relief available to prevent a breach.
How can shareholders take action against a director for breach of duty?
If the majority of shareholders agree, the directors will co-operate and bring a claim.
A minority of shareholders can bring a derivative claim if the conduct has not been ratified. Must first obtain permission from the court.
What is the effect of entering a contract on behalf of a company before it is incorporated?
The agent who executed the contract on behalf of the company is personally liable - s.51.
When the company is incorporated, a novation agreement must be signed.
Who can call a board or general meeting?
- Board meeting: any director (Art 9)
- General meeting: the board (s.302) or shareholders (s.303)
