SGS 1: Setting up in business Flashcards
1. appreciate the process by which law firms engage new clients; 2. analyse the legal and commercial framework in which businesses operate; 3. appreciate the different legal forms that businesses may adopt and explain the main advantages and disadvantages; and identify some key constitutional differences between public and private companies through the analysis and interpretation of statutory provisions.
What are the 2x4 steps that need to be taken when taking on a new client?
- Conflict check
- MLR check
- Letter of engagement
- Costs
- Complaints
- Money on account
- Open file
- Meeting
What is the name of private vs public companies? Which statute says so?
- Private: LTD (s59(1))
- Public: PLC (s58(1))
What is the minimum number of shareholders for private vs public companies?
- Private: 1 - s7(1) and s8(1)
- Public - 1 - s7(1) and s8(1)
What is the minimum number of directors for private vs public companies?
- Private - 1: s154(1)
- Public - 2: s154(2)
Is a company secretary required for private / public companies?
- Private: NO - S270(1) - can do what they like
- Public - YES - s271
Which Certificates req. before commencement of trading for private / public companies?
- Private: Certificate of Incorporation-s15(4). Can commence business as soon as it is incorporated
- Public: cert. of incorporation also. But cannot start until a trading certificate is issued by Registrar showing that companys allotted share capital is not less than the min. - s761(1) and (2)
What is the minimum share capital that needs to be issued for a private / public company?
- Private: at least one share
- Public: minimum of £50k - s763(1)(a)/(b)
Does CA 2006 allow offer of shares to the public for private / public company?
- Private: this is prohibited - s755(1)
- Public: permitted - subject to FSMA restrictions
What is the method of payment + minimum amount payable for share capital for private and public companies?
- Private - there is no restriction on method of payment: shares can be issued without immediate payment - s582(1)
- Public: payments in cash only or where consideration has been independently valued - s593(1)
- Public: 25% of nominal value must be paid on allotment and whole of any premium - s586(1)
Which types of companies can pass written resolutions?
- Only private companies?
Which types of companies do restrictions on loans to directors apply to?
- Apply more strictly to public companies
Are private companies restricted from providing ‘financial assistance’ for the purchase of their own shares?
- They are NOT restricted
- Whereas public companies are prohibited
Which of public / private companies can purchase their own shares out of capital?
- Private companies can purchase their own shares out of capital
- But public companies cannot purchase their own shares out of capital
Which of public and private companies give more power to shareholders?
- Private companies give more power to shareholders
Which type of company shares are more attractive to an investor? Why?
- Public company shares are more attractive to an investor
- Because they are more readily resold
What are the main benefits of partnerships?
- Tax transparent
- High degree of confidentiality
- No partnership agreement required - terms applied in accordance of the PA 1980
What is the default position of partnerships if there is no partnership agreement?
- Equal shares, even if the initial contributions are different
- No entitlement to a salary
- Decisions > must be made via majority
- Partner cannot be removed against his will
- All property brought in = partnership property
What is the situation in a limited partnership?
- There is 1 general partner with unlimited liability
- And 1 limited partner with limited liability
- Management carried out by GP not the LP - such partnership tends to be used in specific commercial context only - e.g. with private equity.
What 9 factors must be contained in a partnership agreement?
- Profit & capital share
- Liability for debts
- Payment of salary
- Decision making / delegation of power
- Prevention of automatic termination when partner dies / retires/ leaves
- What happens if a new partner wants to join in
- Variation of PA
- Use of own assets as a partner?
