Limited companies: part 1

Question 1

What are the two ways to provide a business client with a company?

Answer 1

1. incorporating a new company
2. acquiring a company that has already been incorporated, but which has not traded (off the peg/shelf company)

Question 2

For a new company to be registered, what must be sent to Companies House?

Answer 2

• application to register a company (IN01)
• memorandum of association
• articles of association
• the requisite fee

Question 3

When can a company name not be used/chosen?

Answer 3

• when it is the same as that of an existing registered company
• in the opinion of the Secretary of State offensive or constitutes a criminal offence
• includes words suggesting a connection with the Government or a local authority or particular ‘sensitive’ words

Question 4

What are some examples of the ‘sensitive’ words that cannot be used as part of a company name unless authorised?

Answer 4

• anything medical/dentistry
• anything to do with money/banks/charity/fund/insurance/chartered
• social service/special school/institution
• tribunal/police/post office/government/council
• British/English/Welsh /Scotland/Ireland
• anything royal -King/Queen/Prince/Windsor

Question 5

Can a company change its name?

Answer 5

Yes by special resolution and then sending a NM01 form to Companies House together with the special resolution and the required fee

Question 6

Can companies adopt a separate trading/business name?

Answer 6

Yes and this does not need to be disclosed to Companies House

Question 7

What are the articles of association?

Answer 7

They are the company’s internal rulebook dealing with directors, shareholders, meetings and key administrative requirements. They are a contract between a shareholder and the company and a shareholder and other shareholders

Question 8

What are the model articles?

Answer 8

The standard sets of articles provided by the Companies Act. There are different ones for different types of companies

Question 9

Do you have to use the model articles?

Answer 9

No, you can make your own, use the model articles with specific amendments or use the model articles in their entirety but the model articles apply automatically by default

Question 10

Can the articles be changed?

Answer 10

Yes by special resolution (s21(1) CA)

Question 11

Does the company need to inform anyone of the change to the articles?

Answer 11

Yes, a copy of the special resolution and the amended articles must be filed at Companies House within 15 days (ss26(1), 29 and 30 CA)

Question 12

What does the statement of capital and initial shareholdings show?

Answer 12

1. initial share capital - the number of shares of each type and their nominal value
2. rights attaching to the different types/classes of share
   3.initial shareholdings

Question 13

Is there a minimum amount of shareholders required?

Answer 13

Yes, one shareholder

Question 14

What makes someone a person with significant control?

Answer 14

One or more of the following:
- they hold more than 25% of the shares
- they have more than 25% of the voting rights
- they have the right to appoint or remove the majority of the board

Question 15

What is the memorandum of association?

Answer 15

A statement of intention of the subscriber(s) to form a company and become shareholders, taking at least one share each.

Question 16

The company cannot enter into contracts until what has been issued?

Answer 16

The certificate of incorporation

Question 17

If an accounting reference date has not been fixed what day will it be?

Answer 17

The last day of the month of incorporation

Question 18

What is a board meeting?

Answer 18

Meetings of the directors, who pass board resolutions to make decisions

Question 19

What is a general meeting?

Answer 19

Meetings of the members/shareholders, who pass ordinary resolutions and special resolutions to make decisions

Question 20

What does quorum mean?

Answer 20

The minimum amount of people required to be present in order for valid decisions to be made

Question 21

Which model article prevents a director voting and counting towards the quorum on any decision in which they have a personal interest?

Answer 21

MA14

Question 22

Can model article 14 be suspended?

Answer 22

Yes by an ordinary resolution (MA14(3))

Question 23

Does a director have to disclose a personal interest in a proposed or existing transaction or arrangement?

Answer 23

Yes, s177 and 182 CA

Question 24

What majority is required for an ordinary resolution?

Answer 24

A simple majority (more than 50%) of shareholders attending and voting at a general meeting

Question 25

What majority is required for a special resolution?

Answer 25

A majority of 75% or more of shareholders attending and voting at a general meeting

Question 26

How many days notice are required to call a general meeting?

Answer 26

14 clear days (so 16) and add an additional 2 days if serving notice by email or post

Question 27

Do accounts need to be filed for a company?

Answer 27

Yes, each financial year with Companies House. It is a criminal offence not to however small companies are exempt

Question 28

What makes a small company?

Answer 28

Two or more of the following:
- turnover of not more than £10.2m
- balance sheet of no more than £5.1m
- not more than 50 employees

Question 29

What must be filed each year within 14 days of the anniversary of the company’s incorporation?

Answer 29

A confirmation statement