Lecture 3 - Co Registration: Co Records

Question 1

What is the application process to register a company?

Answer 1

an application for registration, various documents and a fee must be sent to the Registrar‐usually electronically.
Application for registration must contain:
- The company’s proposed name
- The location of its registered office ‐ (Country)
- That the liability of its members is limited
- Whether the company is to be private or public
- A statement of the intended address of the registered office

Question 2

What documents are needed to register a company?

Answer 2

Documents to be delivered:
- Articles of association if the company does not adopt model articles
- Statement of proposed officers – directors and company secretary with their consent to act
- Statement of Compliance that the requirements of the Companies Act in respect of registration have been complied with
- Statement of capital and initial shareholdings

Question 3

Do PLCs need a trading certificate?

Answer 3

A public limited company needs a trading certificate. Before it can start trading it must submit:
- An application stating that the nominal value of the company’s allotted share capital is not less than the authorised minimum £50,000
- A PLC must have a minimum issued share capital of £50,000 with at least 25% (£12,500) of this being paid.)
- A statement of compliance
- Failure to obtain a trading certificate within a year of incorporation may result in a compulsory winding up (Insolvency Act 1986)

Question 4

What is a promoter and explain their duties?

Answer 4

A promoter is one who undertakes to form a company with reference to a given project and to set it going and who takes the necessary steps to accomplish that purpose. The term promoter also includes anyone who makes any business preparation for the company.

A promoter owes certain duties to a company:
- A general duty to exercise reasonable care and skill
- A fiduciary duty to disclose any personal interest in a transaction and sometimes to account for monies received
- Any profits that he makes from promoting the company and fails to disclose must be surrendered to the compan

Question 5

Explain pre-incorporation contracts

Answer 5

If a promoter makes a contract on the company’s behalf prior to incorporating (the company itself has no capacity to enter contracts prior to coming into existence):

• The company cannot ratify the contract
• The company is not bound by it
• The contract takes effect (subject to any agreement to the contrary) in the same way as one made with the promoter, and s/he is personally liable

A promoter can avoid potential liability by:
- Not making contracts until a company has been incorporated
- By using an off the shelf company
- Agreeing a draft with the third party on the basis that the company, once formed, will enter into the agreed contract with the company

Question 6

Explain Off-Shelf Companies and its advantages/disadvantages

Answer 6

Companies do not have to be formed from scratch ‐ it is possible to buy a company that has already been incorporated ‘off the shelf’.
Advantages are:
- Quicker and probably cheaper
- It avoids any potential liability for pre‐incorporation contracts
disadvantages are:
- Change of name
- Transfers of subscribers’ shares
- Change of directors and possibly company secretary
- Possible alteration of articles

Question 7

Articles of Association

Answer 7

• Articles of Association consist of the internal rules that relate to the management and administration of the company
• Articles together with resolutions and (shareholder) agreements form the constitution of the company.
• The Companies Act allows the Secretary of State to provide model or standard articles that companies may adopt

If no articles are registered, then the company will be automatically incorporated with the default model articles

Question 8

Annual Accounts and Reports

Answer 8

Most companies must prepare annual accounts, get them approved at the AGM and then filed at the Registry
-In many cases accounts must be audited
- The directors must produce a report and
- Public companies must include a Directors’ Remuneration Report
- Confirmation Statement (formerly annual return) must be completed and sent to Companies House each year

Question 9

Audit requirements

Answer 9

Some companies are exempt from audits:
- Small companies
- Dormant companies
- Nonprofit making companies subject to public sector audit.
- Auditors are appointed for each financial year