Shareholder decisions

Question 1

What document must all 3 transactions have? What must the doc set out?

Answer 1

Memorandum:
i. nature
ii. value
iii. purpose
iv. extent of company liability

Question 2

Who is connected persons? (4)

Answer 2

1. Family
2. body corporate
3. Business partner
4. Trustees of a trust which the director or someone connected to them is a beneficiary

Question 3

Name 3 key transactions taken by SH? What approval do all 3 transactions require?

Answer 3

1. long term service contract
2. substantial property
3. loans

ordinary resolution of the SH

Question 4

What is a long term service contract?

Answer 4

a contract with a guaranteed period of more than 2 years

Question 5

What is a guaranteed period? (3)

Answer 5

i) time in which company cannot terminate or only in specified circumstances

ii) contractual term

iii) period of notice

Question 6

What action can be taken if the service contract does not receive approval?

Answer 6

terminated upon reasonable notice

Question 7

What counts as substantial property? (2)

Answer 7

1. asset above £100k
2. assets above £5,000 but not more than £100k, but only if worth more than 10% of the company’s NAV

Question 8

When is SH approval not needed for a loan? (2)

Answer 8

1. less than £10k
2. less than £50k but for company expenditure

Question 9

Name the 5 types of loan

Answer 9

1. loan
2. quasi-loan (director will reimburse)
3. credit (pay later)
4. guarantees
5. loan to connected person

Question 10

What type of loans require SH approval for both public and private companies? (2)

Answer 10

loans
guarantees

Question 11

What type of loans require SH approval for private companies only if connected to a public company? (3)

Answer 11

1. quasi loan
2. credit transaction
3. loans to connected person