Module 10: Company Formation and Promoters Flashcards
What is the documentation required for registration?
Application for registration Memorandum of association Statement of share capital and initial shareholdings Statement of proposed officers Statement of initial significant control Statement of compliance Registration fee
Who are companies registered with in the UK?
Registrar of Companies
Scotland send to Edinburgh
England and Wales send to Cardiff
NI Belfast
What must the application for registration must state?
Company's proposed name Where registered office to be situated Statement of intended address Whether liability is to limited, shares/guarantee Ltd or Plc Intended principal business activity
What is the memorandum of associated?
Brief document
Evidence subscribers intend to form company and become members
Evidence prepared to take a share
What is included in the statement of share capital and initial shareholdings?
Snapshot of share capital No. shares to be taken Aggregate nominal value of them Aggregate amount unpaid on them Rights for each class Where by guarantee- statement of guarantee (will contribute amount if wound up)
What is included in the statement of proposed officers?
Details of first directors
Company secretary (required for plc)
Service address for each director and residential address
What is included in the statement of initial significant control?
Statement whether any individual holds more than 25% shares
Info about those infos
What is the statement of compliance?
Requirements of CA 2006 met
Offence to make false statement
What is the registration fee?
Sent with documents
£12 for online application
When is a company required to submit Articles of Association?
If it does not want to adopt the model articles
If non submitted will be incorporated with model articles appropriate to type of company
What will the certificate of incorporation state?
Name and registered number Date of incorporation Limited or unlimited Plc of Ltd If reg office is in E/W, S, NI
When does company come into existence?
Date of incorporation
What did the Small Business, Enterprise and Employment Act (SBEE) 2015 introduce?
Royal Assent 26 March 2015 Changes to the CA 2006 Process of registering a company 'One click' registration Same time provide HMRC with all info for tax, VAT and PAYE 'Electronic means only'
What is the Streamlined Company Registration Service? (SCRS)
Info required by Companies House and HMRC supplied through SCRS on a single occasion to a single recipient by electronic means
Where a company is applying to be registered as a public company what else do they have to apply for?
Trading certificate
What must the application for a trading certificate contain?
Nominal value of company’s allotted share capital is not less than £50,000
Amount of Preliminary expenses
Amount paid to promoter and consideration for payment
Statement of compliance (obtained 1/4 nom and premium)
What is trading certificate conclusive evidence of?
Company is entitled to do business and exercise borrowing powers
Can’t do so before
Directors liable to penalties if do
If plc not obtained one after 1 year of incorp can be wound up under Insolvency Act 1986
What is the certificate of incorporation conclusive evidence of?
Requirements of the Act have been met
What company registers and other info must companies keep available for inspection?
Register of members
Register of directors and secretaries
Copies of charges
How long must companies keep certain registers available for inspection?
10 years
What are the details of members companies must keep?
Name and address of each
Number of shares of each
Date of becoming a member and ceasing to be
What are the details of directors (and secretaries)companies must keep?
Names of present and former
Service address
Directors county of residence and nationality
Date of birth
What are the details of copies of charges?
Copies of fixed and/or floating charges including any instruments amending charges and related docs
Who can inspect the statutory registers and copies of charges?
Shareholders and creditors without charge
Public for nominal fee
Register of People with Significant Control?
From 6 April 2016 all must keep a PSC
Individual who holds more than 25% of the shares
Calculated by reference to nom value
Info includes name, address, date of birth, nationality , country of residence, date become registrable and interest in company
The Confirmation statement?
Every company at least every 12m required to deliver
Keep Registrar informed
No changes or the changes
e.g. PSC, directors, type of company, share capital
What is the definition of a promoter?
Person who forms a company
‘Undertakes to form a company with reference to a given project and to set it going and takes necessary steps to accomplish’
Promoter includes anyone who what?
Makes business preparations
not someone who acts in professional capacity e.g accountant
What are the duties of a promoter?
Owed fiduciary duty to company setting up
Promoter often to be owner
Must disclose to other shareholders details of profit making
Plc via prospectus or listing particulars
May keep profit even if doesn’t disclose properly- full knowledge
Remedies for breach of promoters fiduciary duty?
Primary remedy- rescind contract and recover money
Too late to rescind- sue for return of secret profit
Liquidation- restore company anything obtained in breach
Payment for Promoters pre-incorporation services?
No automatic right
Usually arrange that the first directors will either pay expenses or refund
What is a pre-incorporation contract?
Made on behalf of company before incorporated
Made by promoter acting like an agent for company
Can’t ratify as not in existence when made
May enter into a new contract on similar terms
Liability for pre-incorporation contracts?
Promoter is personally liable
Protects 3rd parties
Ways promoter can avoid liability?
Making draft contracts- complete on formation
Include clauses allowing promoters liability to come to an end if contract novated
Buying a company ‘off the shelf’
What is buying a company ‘off the shelf’?
Admin requirements in relation to forming a company can be avoided
Shares transferred to buyer and existing directors resign
Name likely to be changed
