SQE2 Written Day 3 (Business)

Question 1

Drafting - Meetings - What is the difference between present and in attendance?

Answer 1

Present means actively taking part.
In attendance means at the meeting but not taking part.

Question 2

Drafting - Meetings - Standard Quorum number?

Answer 2

2 required.

Question 3

Drafting - Meetings - What is the effect on quorum where one director has an interest in the resolution?

Answer 3

The director will not count towards quorum under the model articles, so there will need to be at least two other directors present.

Question 4

Drafting - Meetings - What should be included in any statement about a proposed transaction?

Answer 4

That the proposed transaction would promote the business of the company, including any specific factors taken into account when reaching that conclusion.

Question 5

Drafting - Meetings - As well as the wording of a particular transaction, what should this also trigger?

Answer 5

Any admin needed to be carried out as a result.

Question 6

Drafting - Meetings - What is the standard structure of a meeting of the board of directors? [6 items]

Answer 6

Notice
Quorum
Voting
Declarations of interest (and impact on quorum / voting)
Directors Resolutions
Administration required as follow-up to meeting

Question 7

Drafting - Meetings - What is the standard structure of a meeting of the board of directors? [6 items]

?????????????
Quorum
Voting
Declarations of interest (and impact on quorum / voting)
Directors Resolutions
Administration required as follow-up to meeting

Answer 7

Notice of meeting

Question 8

Drafting - Meetings - What is the standard structure of a meeting of the board of directors? [6 items]

Notice
????????????
Voting
Declarations of interest (and impact on quorum / voting)
Directors Resolutions
Administration required as follow-up to meeting

Answer 8

Quorum

Question 9

Drafting - Meetings - What is the standard structure of a meeting of the board of directors? [6 items]

Notice
Quorum
????????????
Declarations of interest (and impact on quorum / voting)
Directors Resolutions
Administration required as follow-up to meeting

Answer 9

Voting

Question 10

Drafting - Meetings - What is the standard structure of a meeting of the board of directors? [6 items]

Notice
Quorum
Voting
??????????????????????
Directors Resolutions
Administration required as follow-up to meeting

Answer 10

Declarations of interest (and impact on quorum / voting)

Question 11

Drafting - Meetings - What is the standard structure of a meeting of the board of directors? [6 items]

Notice
Quorum
Voting
Declarations of interest (and impact on quorum / voting)
?????????????????
Administration required as follow-up to meeting

Answer 11

Directors Resolutions

Question 12

Drafting - Meetings - What is the standard structure of a meeting of the board of directors? [6 items]

Notice
Quorum
Voting
Declarations of interest (and impact on quorum / voting)
Directors Resolutions
?????????????????

Answer 12

Administration required as follow-up to meeting

Question 13

Drafting - Meetings - What is the standard structure of NOTICE of a meeting of Shareholders [General meeting, in person]? [4 items]

Answer 13

Notice / Consent to short notice
Quorum
Resolutions
Voting

Question 14

Drafting - Meetings - What is the standard structure of a NOTICE of meeting of Shareholders [General meeting, in person]? [4 items]

?????????????
Quorum
Resolutions
Voting

Answer 14

Notice / Consent to short notice

Question 15

Drafting - Meetings - What is the standard structure of a NOTICE of meeting of Shareholders [General meeting, in person]? [4 items]

Notice / Consent to short notice
????????????
Resolutions
Voting

Answer 15

Quorum

Question 16

Drafting - Meetings - What is the standard structure of a NOTICE of meeting of Shareholders [General meeting, in person]? [4 items]

Notice / Consent to short notice
Quorum
????????????
Voting

Answer 16

Resolutions

Question 17

Drafting - Meetings - What is the standard structure of NOTICE of a meeting of Shareholders [General meeting, in person]? [4 items]

Notice / Consent to short notice
Quorum
Resolutions
???????????

Answer 17

Voting

Question 18

Drafting - Meetings - What is the standard structure of a written resolution?

Answer 18

Circulation
Contents - Ordinary / special resolutions
How to vote
Lapse date

Question 19

Drafting - Meetings - What is the standard structure of a written resolution?

??????????
Contents - Ordinary / special resolutions
How to vote
Lapse date

Answer 19

Circulation

Question 20

Drafting - Meetings - What is the standard structure of a written resolution?

Circulation
??????????
How to vote
Lapse date

Answer 20

Contents - Ordinary / special resolutions

Question 21

Drafting - Meetings - What is the standard structure of a written resolution?

Circulation
Contents - Ordinary / special resolutions
??????????????????
Lapse date

Answer 21

How to vote

Question 22

Drafting - Meetings - What is the standard structure of a written resolution?

Circulation
Contents - Ordinary / special resolutions
How to vote
???????????????

Answer 22

Lapse date

Question 23

Drafting - Meetings - What steps are required to approve a director’s service contract for more than 2 years? [5 steps]

Answer 23

Board resolution to approve
Memo of contract to be at registered office for 15 days prior to General Meeting
GM with ordinary resolution OR written resolution to approve
2nd Board meeting to enter into contract and authorise directors to sign.
If fail to obtain shareholder approval - contract replaced with reasonable notice required to remove a director

Question 24

Drafting - Meetings - What steps are required to approve a director’s service contract for more than 2 years?

?????????
Memo of contract to be at registered office for 15 days prior to General Meeting
GM with ordinary resolution OR written resolution to approve
2nd Board meeting to enter into contract and authorise directors to sign.
If fail to obtain shareholder approval - contract replaced with reasonable notice required to remove a director

Answer 24

Board resolution to approve

Question 25

Drafting - Meetings - What steps are required to approve a director's service contract for more than 2 years? Board resolution to approve ??????????????????? (15 days) GM with ordinary resolution OR written resolution to approve 2nd Board meeting to enter into contract and authorise directors to sign. If fail to obtain shareholder approval - contract replaced with reasonable notice required to remove a director

Answer 25

Memo of contract to be at registered office for 15 days prior to General Meeting

Question 26

Drafting - Meetings - What steps are required to approve a director's service contract for more than 2 years? Board resolution to approve Memo of contract to be at registered office for 15 days prior to General Meeting ?????????????????? Or ????????????????? 2nd Board meeting to enter into contract and authorise directors to sign. If fail to obtain shareholder approval - contract replaced with reasonable notice required to remove a director

Answer 26

GM with ordinary resolution OR written resolution to approve

Question 27

Drafting - Meetings - What steps are required to approve a director's service contract for more than 2 years? Board resolution to approve Memo of contract to be at registered office for 15 days prior to General Meeting GM with ordinary resolution OR written resolution to approve 2nd Board meeting to ????????????????????? If fail to obtain shareholder approval - contract replaced with reasonable notice required to remove a director

Answer 27

enter into contract and authorise directors to sign.

Question 28

Drafting - Meetings - What steps are required to approve a director's service contract for more than 2 years? Board resolution to approve Memo of contract to be at registered office for 15 days prior to General Meeting GM with ordinary resolution OR written resolution to approve 2nd Board meeting to enter into contract and authorise directors to sign. If fail to obtain shareholder approval - ????????????????????

Answer 28

contract replaced with reasonable notice required to remove a director

Question 29

Drafting - Meetings - What steps are required to approve the purchase of more than £100k, or more than £5k and is 10% or more of the net asset value of the company? (3)

Answer 29

Board meeting 1 - resolution to approve GM / Written resolution and ordinary resolution to approve Board meeting 2 and resolution to enter into contract and authorise directors to sign.

Question 30

Drafting - Meetings - What steps are required to approve the purchase of more than £100k, or more than £5k and is 10% or more of the net asset value of the company? ?????????????? GM / Written resolution and ordinary resolution to approve Board meeting 2 and resolution to enter into contract and authorise directors to sign.

Answer 30

Board meeting 1 - resolution to approve

Question 31

Drafting - Meetings - What steps are required to approve the purchase of more than £100k, or more than £5k and is 10% or more of the net asset value of the company? Board meeting 1 - resolution to approve ???????????????????? Board meeting 2 and resolution to enter into contract and authorise directors to sign.

Answer 31

GM / Written resolution and ordinary resolution to approve

Question 32

Drafting - Meetings - What steps are required to approve the purchase of more than £100k, or more than £5k and is 10% or more of the net asset value of the company? Board meeting 1 - resolution to approve GM / Written resolution and ordinary resolution to approve ?????????????????

Answer 32

Board meeting 2 and resolution to enter into contract and authorise directors to sign.

Question 33

Drafting - Meetings - When authorising a substantial purchase to or from a director, what additional steps / factors need to be taken? (3)

Answer 33

Obviously, declare interest Can't count towards quorum or vote (unless model articles adjusted) If shareholders vote against then any director who goes on to authorise the transaction must account to company for any gain, and indemnify company for any loss.

Question 34

Drafting - Meetings - When authorising a substantial purchase to or from a director, what additional steps / factors need to be taken? Obviously, declare interest Can't count towards quorum or vote (unless model articles adjusted) If shareholders vote against then ????????????????

Answer 34

any director who goes on to authorise the transaction must account to company for any gain, and indemnify company for any loss.

Question 35

Drafting - Meetings - When authorising a loan of over £10,000 to a director, what additional steps / factors need to be taken? (3)

Answer 35

Obviously, declare interest Can't count towards quorum or vote (unless model articles adjusted) If shareholders vote against then any director who goes on to authorise the transaction must account to company for any gain, and indemnify company for any loss.

Question 36

Drafting - Meetings - When authorising a loan of over £10,000 to a director, what additional steps / factors need to be taken? Obviously, declare interest Can't count towards quorum or vote (unless model articles adjusted) If shareholders vote against then ??????????????

Answer 36

any director who goes on to authorise the transaction must account to company for any gain, and indemnify company for any loss.

Question 37

Drafting - Meetings - What is the standard agenda of a shareholders meeting? [7 items]

Answer 37

Apologies Quorum Interests Business Resolutions (eg appointment of director) Administrative matters AOB Meeting closed

Question 38

Drafting - Meetings - What is the standard agenda of a shareholders meeting? [7 items] ????????? Quorum Interests Business Resolutions (eg appointment of director) Administrative matters AOB Meeting closed

Answer 38

Apologies

Question 39

Drafting - Meetings - What is the standard agenda of a shareholders meeting? [7 items] Apologies ??????????? Interests Business Resolutions (eg appointment of director) Administrative matters AOB Meeting closed

Answer 39

Quorum

Question 40

Drafting - Meetings - What is the standard agenda of a shareholders meeting? [7 items] Apologies Quorum ??????????? Business Resolutions (eg appointment of director) Administrative matters AOB Meeting closed

Answer 40

Interests

Question 41

Drafting - Meetings - What is the standard agenda of a shareholders meeting? [7 items] Apologies Quorum Interests ???????????????? Administrative matters AOB Meeting closed

Answer 41

Business Resolutions (eg appointment of director)

Question 42

Drafting - Meetings - What is the standard agenda of a shareholders meeting? [7 items] Apologies Quorum Interests Business Resolutions (eg appointment of director) ?????????????? AOB Meeting closed

Answer 42

Administrative matters

Question 43

Drafting - Meetings - What is the standard agenda of a shareholders meeting? [7 items] Apologies Quorum Interests Business Resolutions (eg appointment of director) Administrative matters ??????????? Meeting closed

Answer 43

AOB

Question 44

Drafting - Meetings - What is the standard agenda of a shareholders meeting? [7 items] Apologies Quorum Interests Business Resolutions (eg appointment of director) Administrative matters AOB ?????????????

Answer 44

Meeting closed

Question 45

Drafting - Meetings - What is the standard wording of a resolution? In this example, a special resolution changing the name of the company.

Answer 45

THAT: pursuant to s77 of the Act, the Company's name be changed to XX Limited

Question 46

Drafting - Meetings - What would appear next to the proposed resolution, in a written resolution?

Answer 46

For / Against

Question 47

Drafting - Meetings - What would appear below the proposed resolution, for a written resolution?

Answer 47

Please read the notes at the end of this document before signifying your agreement to the resolution. The undersigned, a person entitled to vote on the above resolution on the circulation date, hereby irrevocably agree to the resolution as indicated above. Signed; Dated Notes: If you wish to indicate your agreement place an X in the box Once you have indicated your intention please sign and date and return to the Company using one of the following methods:- [examples] By hand – by delivering the signed copy to the Company Secretary at this Company’s Registered office at 1 High Street etc etc By Post – blah blah By email – by attaching a scanned copy of the signed document to an email and sending it to blah blah, entering “Written resolution dated XYZ” in the subject of the email.

Question 48

Drafting - Meetings - What would appear below the proposed resolution, for a written resolution? Please read the notes at the end of this document before ??????????????? The undersigned, a person entitled to vote on the above resolution on the circulation date, hereby irrevocably agree to the resolution as indicated above. Signed; Dated Notes: If you wish to indicate your agreement place an X in the box Once you have indicated your intention please sign and date and return to the Company using one of the following methods:- [Address / email / by hand]

Answer 48

signifying your agreement to the resolution.

Question 49

Drafting - Meetings - What would appear below the proposed resolution, for a written resolution? Please read the notes at the end of this document before signifying your agreement to the resolution. The undersigned, a person entitled to vote on the above resolution on the circulation date, hereby ????????????????/ Signed; Dated Notes: If you wish to indicate your agreement place an X in the box Once you have indicated your intention please sign and date and return to the Company using one of the following methods:- [Address / email / by hand]

Answer 49

irrevocably agree to the resolution as indicated above.

Question 50

Drafting - Meetings - What would appear below the proposed resolution, for a written resolution? Please read the notes at the end of this document before signifying your agreement to the resolution. The undersigned, a person entitled to vote on the above resolution on the circulation date, hereby irrevocably agree to the resolution as indicated above. ?????????????????? Notes: If you wish to indicate your agreement place an X in the box Once you have indicated your intention please sign and date and return to the Company using one of the following methods:- [Address / email / by hand]

Answer 50

Signed; Dated

Question 51

Drafting - Meetings - What would appear below the proposed resolution, for a written resolution? Please read the notes at the end of this document before signifying your agreement to the resolution. The undersigned, a person entitled to vote on the above resolution on the circulation date, hereby irrevocably agree to the resolution as indicated above. Signed; Dated Notes: If you wish to indicate ???????????? Once you have indicated your intention please sign and date and return to the Company using one of the following methods:- [Address / email / by hand]

Answer 51

your agreement place an X in the box

Question 52

Drafting - Meetings - What would appear below the proposed resolution, for a written resolution? Please read the notes at the end of this document before signifying your agreement to the resolution. The undersigned, a person entitled to vote on the above resolution on the circulation date, hereby irrevocably agree to the resolution as indicated above. Signed; Dated Notes: If you wish to indicate your agreement place an X in the box Once you have indicated your intention please ????????????

Answer 52

sign and date and return to the Company using one of the following methods:- [Address / email / by hand]

Question 53

Drafting - Meetings - What should be at the very top of a document sending a special resolution to companies house?

Answer 53

Companies Act 2006 Company Limited by Shares Special Resolution -of- ABC Limited (the "Company")

Question 54

Drafting - Meetings - What should be at the very top of a document sending a special resolution to companies house? ???????????????? Company Limited by Shares Special Resolution -of- ABC Limited (the "Company")

Answer 54

Companies Act 2006

Question 55

Drafting - Meetings - What should be at the very top of a document sending a special resolution to companies house? Companies Act 2006 ?????????????????? Special Resolution -of- ABC Limited (the "Company")

Answer 55

Company Limited by Shares

Question 56

Drafting - Meetings - What should be at the very top of a document sending a special resolution to companies house? Companies Act 2006 Company Limited by Shares ???????????????????? ABC Limited (the "Company")

Answer 56

Special Resolution -of-

Question 57

Drafting - Meetings - What should be at the very top of a document sending a special resolution to companies house? Companies Act 2006 Company Limited by Shares Special Resolution -of- ?????????????????

Answer 57

ABC Limited (the "Company")

Question 58

Drafting - Meetings - What should the wording of a document sent to companies house say about a resolution?

Answer 58

Meeting Type of resoution Wording Signature of chair At a general meeting of the Company held at 1 Smith Street, London W1 1AB on 01.01.24 the following resolution was passed as a special resolution. Special Resolution THAT: Pursuant to s77 of the Companies Act 2006, the Company’s name be changed to XX Limited. Signed ___________________ (Chair)

Question 59

Drafting - Meetings - What should the wording of a document sent to companies house say about a resolution? ???????????? Type of resolution Wording Signature of chair

Answer 59

Meeting - At a general meeting of the Company held at 1 Smith Street, London W1 1AB on 01.01.24 the following resolution was passed as a special resolution.

Question 60

Drafting - Meetings - What should the wording of a document sent to companies house say about a resolution? Meeting ?????????????????? Wording Signature of chair

Answer 60

Type of resolution

Question 61

Drafting - Meetings - What should the wording of a document sent to companies house say about a resolution? Meeting Type of resolution ????????????? Signature of chair

Answer 61

Wording eg THAT: Pursuant to s77 of the Companies Act 2006, the Company’s name be changed to XX Limited.

Question 62

Drafting - Meetings - What should the wording of a document sent to companies house say about a resolution? Meeting Type of resolution Wording ?????????????

Answer 62

Signature of chair

Question 63

Drafting - Meetings - How should a resolution about entering into a contract be worded?

Answer 63

THAT: pursuant to section 190 of the Act the draft contract (a copy of which is attached) to be entered into between MM (a director of the Company) and the Company for the supply by MM to the Company of software valuer at £120,000 is approved.

Question 64

Drafting - Meetings - Do Ordinary Resolutions need to be filed at Companies House?

Answer 64

Not generally, unless they're to do with directors and them being awarded a contract for more than 2 years.

Question 65

Drafting - Meetings - What duration of directors contract requires an ordinary resolution?

Answer 65

Over 2 years.

Question 66

Drafting - Meetings - what should be the wording in a document sent to companies house with regard to changing the articles of association?

Answer 66

THAT: the new articles of association a copy of which is attached be adopted in substitution for the Company’s existing articles of association.

Question 67

Drafting - IN01 - Application to register a new company. What must the address not be?

Answer 67

A PO box

Question 68

Drafting - IN01 - Application to register a new company. What should be added if there is no relevant code for the business activity?

Answer 68

A brief description

Question 69

Drafting - IN01 - Application to register a new company. What are Corporate Secretary and Corporate Director appointments used for?

Answer 69

When the proposed secretary or director is itself a company

Question 70

Drafting - IN01 - Application to register a new company. What is a suggested wording for statement of capital?

Answer 70

‘Each share is entitled to one vote in any circumstances. Each stare is entitled to participate equally in dividend payments or any other distribution, including on a winding up of the company. The shares are non-redeemable’

Question 71

Drafting - Registration of Company. What type of companies use 'Treasury Shares'

Answer 71

Public Limited Companies

Question 72

Drafting - SH03 form - Purchase of own shares. When would this form be used?

Answer 72

Where a company is buying back its own shares, and this form is sent to companies house as a result.

Question 73

Drafting - SH03 form - Purchase of own shares. What is payable?

Answer 73

Stamp duty.

Question 74

Drafting - Stock transfer form What is payable?

Answer 74

Stamp duty

Question 75

Drafting - MR01 - Particulars of a Charge. When would this form be used?

Answer 75

Where the company is granting a mortgage or charge over assets

Question 76

Drafting - MR01 - Particulars of a Charge. When is a brief description required?

Answer 76

Where a fixed charge or security is created over an asset which also requires registration elsewhere eg land at HMLR, ships, aircraft etc.

Question 77

Drafting - MR01 - Particulars of a Charge. When would a negative charge be required?

Answer 77

When there is a promise not to create a later charge or security ranking BEFORE the charge now being registered.

Question 78

Drafting - Stock transfer forms. What is consideration money?

Answer 78

The amount being paid for the shares.

Question 79

Drafting - Stock transfer forms. Whose name appears in the undertaking with relation to where the shares are held?

Answer 79

The company's

Question 80

Drafting - Stock transfer forms. 'Units of' - what do we write here?

Answer 80

Nothing - ignore it as it's not relevant to shares and therefore the SQE.

Question 81

Drafting - Stock transfer forms. What should be in the 'In the name(s) of' box.

Answer 81

Not just the name, but the name AND address.

Question 82

Drafting - Stock transfer forms. Whose signature should be at the bottom - the transferor(s) or the transferee(s)?

Answer 82

The transferor(s)

Question 83

Drafting - Stock transfer forms. What should be added in the box below the signature?

Answer 83

Title, name, address of Transferee(s)

Question 84

Drafting - Stock transfer forms. What are the circumstances where the certificate on the reverse is usually used? When the consideration is less than ??????????

Answer 84

£1,000

Question 85

Drafting - Stock transfer forms. If being completed by a solicitor on behalf of a client, what should regarding the second part of the certificate which confirms authorisation to sign it?

Answer 85

Do not delete it.

Question 86

Drafting - Stock transfer forms. What should be referred to when identifying which share / shares is being sold?

Answer 86

Its unique identifying number.

Question 87

Drafting - standard wording for board resolution

Answer 87

The board resolves to XYZ

Question 88

Writing / CMA - what records need to be kept at the registered office?

Answer 88

Register of members Register of directors Register of secretaries Register of charges Register of people with significant interest

Question 89

Writing / CMA How long do minutes of general meetings need to be kept at the registered office?

Answer 89

10 years.

Question 90

What does an annual confirmation statement contain?

Answer 90

Whether there have been an changes to share capital.

Question 91

Within how long must annual accounts be sent to companies house for a private company?

Answer 91

9 months.

Question 92

Within how long must annual accounts be sent to companies house for a public company?

Answer 92

6 months

Question 93

What additional accounting requirements are there for larger companies?

Answer 93

Must be audited

Question 94

What MUST annual accounts contain?

Answer 94

Balance sheet Statement of profit and losses

Question 95

When must a directors report be a part of the annual accounts?

Answer 95

Medium or large company (50+ employees or turnover over £1M)

Question 96

What must a directors report contain?

Answer 96

Must give recommendations re Dividends

Question 97

What is an annual strategic report?

Answer 97

A report by the company about the performance of the directors in so far as they have promoted the success of the company. Requirement of medium and large companies.

Question 98

Within how long must the appointment or termination of a director be filed at companies house?

Answer 98

14 days

Question 99

Within how long must an approved special resolution be filed at companies house?

Answer 99

15 days

Question 100

Within how long must the allotment of shares be filed at companies house?

Answer 100

15 days

Question 101

What is ONE ordinary resolution that must be filed at companies house?

Answer 101

Allotment of shares

Question 102

When is a change of office address effective from?

Answer 102

When registered at companies house

Question 103

Which type of meeting will a written resolution replace?

Answer 103

A members / shareholders meeting. A board wouldn't need a written resolution.

Question 104

What should be contained in a notice in writing of a Shareholders / Members meeting? [5 strands]

Answer 104

Where & when (think birthday party) What (is being discussed) Wording of any resolutions to be decided How to appoint a proxy 14 CLEAR days notice (16 days, plus two for posting, so 18).

Question 105

How many days notice should a shareholders meeting give, and why?

Answer 105

14 CLEAR days notice (16 days, plus two for posting, so 18).

Question 106

What should be contained in a notice in writing of a Shareholders / Members meeting? ???????????? (think birthday party) What (is being discussed) Wording of any resolutions to be decided How to appoint a proxy 14 CLEAR days notice (16 days, plus two for posting, so 18).

Answer 106

Where & when

Question 107

What should be contained in a notice in writing of a Shareholders / Members meeting? Where & when (think birthday party) What (????????????) Wording of any resolutions to be decided How to appoint a proxy 14 CLEAR days notice (16 days, plus two for posting, so 18).

Answer 107

is being discussed

Question 108

What should be contained in a notice in writing of a Shareholders / Members meeting? Where & when (think birthday party) What (is being discussed) Wording of ?????????????????? How to appoint a proxy 14 CLEAR days notice (16 days, plus two for posting, so 18).

Answer 108

any resolutions to be decided

Question 109

What should be contained in a notice in writing of a Shareholders / Members meeting? Where & when (think birthday party) What (is being discussed) Wording of any resolutions to be decided How ?????????????? 14 CLEAR days notice (16 days, plus two for posting, so 18).

Answer 109

to appoint a proxy

Question 110

What are the requirements for a SHORT NOTICE of a shareholders / members meeting? [2 (kinda 3) requirements]

Answer 110

Majority in actual number, PLUS must hold 90% of the shares. Consent to short notice form

Question 111

What is the main advantage of a written resolution?

Answer 111

It can achieve the result quicker, as only requires replies sufficient to achieve 51% (Ordinary) or 75% (Special).

Question 112

If the shareholders require a meeting then within what timescale should the directors call and hold the meeting?

Answer 112

Call it within 21 days, hold it within 28 days.

Question 113

What is the standard wording when shareholders have approved the terms of a contract?

Answer 113

Members resolve to approve the terms of the contract

Question 114

Which four types of contracts / dealings with directors require an ordinary resolution rather than simply a directors resolution?

Answer 114

Where a director is to sign a contract longer than two years Where there is a substantial property transaction Where there is any type of contract involving a loan or purchase / sale involving a director personally. Ratification of a director's breach.

Question 115

Which four types of contracts / dealings with directors require an ordinary resolution rather than simply a directors resolution? Where a director is to ???????????????? Where there is a substantial property transaction Where there is any type of contract involving a loan or purchase / sale involving a director personally. Ratification of a director's breach.

Answer 115

sign a service contract longer than two years

Question 116

Which four types of contracts require an ordinary resolution rather than simply a directors resolution? Where a director is to sign a service contract longer than two years Where there is a ???????????????????? Where there is any type of contract involving a loan or purchase / sale involving a director personally.

Answer 116

substantial property transaction

Question 117

Which four types of contracts require an ordinary resolution rather than simply a directors resolution? Where a director is to sign a service contract longer than two years Where there is a substantial property transaction Where there is any type of contract involving ???????????????????????

Answer 117

a loan or purchase / sale involving a director personally.

Question 118

Which four types of contracts require an ordinary resolution rather than simply a directors resolution? Where a director is to sign a service contract longer than two years Where there is a substantial property transaction Where there is any type of contract involving a loan or purchase / sale involving a director personally. ?????????? of a director's ?????????

Answer 118

Ratification of a director's breach

Question 119

What counts as a substantial property transaction?

Answer 119

£100k and above -or- more than £5k and exceeds a 10% net asset value of the company.

Question 120

What are the main four changes that require a special resolution?

Answer 120

Change of business name Change to the articles of association Most decisions to buy back shares out of company capital Disapply pre-emption rights (new shares being offered to existing shareholders)

Question 121

What are the main four changes that require a special resolution? Change of ??????????? Change to the articles of association Most decisions to buy back shares out of company capital Disapply pre-emption rights (new shares being offered to existing shareholders)

Answer 121

business name

Question 122

What are the main four changes that require a special resolution? Change of business name Change to ??????????????? Most decisions to buy back shares out of company capital Disapply pre-emption rights (new shares being offered to existing shareholders)

Answer 122

the articles of association

Question 123

What are the main four changes that require a special resolution? Change of business name Change to the articles of association Most decisions to ??????????????? Disapply pre-emption rights (new shares being offered to existing shareholders)

Answer 123

buy back shares out of company capital

Question 124

What are the main four changes that require a special resolution? Change of business name Change to the articles of association Most decisions to buy back shares out of company capital Disapply ??????????????

Answer 124

pre-emption rights (new shares being offered to existing shareholders)

Question 125

What would be a good wording for a proposal to instruct a new director?

Answer 125

It was noted that there was a proposal to appoint [INSERT NAME] as director of the Company. The directors, having regard to their statutory and other duties agreed that appointing [NAME] as a director would promote the success of the Company for the benefit of the members and IT WAS RESOLVED THAT [NAME], having consented to act, be appointed as a director of the Company with immediate effect.

Question 126

What would be a good wording for a proposal to instruct a new director? It was ???????????????? a proposal to appoint [INSERT NAME] as director of the Company. The directors, having regard to their statutory and other duties agreed that appointing [NAME] as a director would promote the success of the Company for the benefit of the members and IT WAS RESOLVED THAT [NAME], having consented to act, be appointed as a director of the Company with immediate effect.

Answer 126

noted that there was

Question 127

What would be a good wording for a proposal to instruct a new director? It was noted that there was a proposal to appoint [INSERT NAME] ????????????????. The directors, having regard to their statutory and other duties agreed that appointing [NAME] as a director would promote the success of the Company for the benefit of the members and IT WAS RESOLVED THAT [NAME], having consented to act, be appointed as a director of the Company with immediate effect.

Answer 127

as director of the Company

Question 128

What would be a good wording for a proposal to instruct a new director? It was noted that there was a proposal to appoint [INSERT NAME] as director of the Company. The directors, ?????????????????????? agreed that appointing [NAME] as a director would promote the success of the Company for the benefit of the members and IT WAS RESOLVED THAT [NAME], having consented to act, be appointed as a director of the Company with immediate effect.

Answer 128

having regard to their statutory and other duties

Question 129

What would be a good wording for a proposal to instruct a new director? It was noted that there was a proposal to appoint [INSERT NAME] as director of the Company. The directors, having regard to their statutory and other duties agreed that appointing [NAME] as a director would ????????????????????? and IT WAS RESOLVED THAT [NAME], having consented to act, be appointed as a director of the Company with immediate effect.

Answer 129

promote the success of the Company for the benefit of the members

Question 130

What would be a good wording for a proposal to instruct a new director? It was noted that there was a proposal to appoint [INSERT NAME] as director of the Company. The directors, having regard to their statutory and other duties agreed that appointing [NAME] as a director would promote the success of the Company for the benefit of the members and?????????????????????, having consented to act, be appointed as a director of the Company with immediate effect.

Answer 130

IT WAS RESOLVED THAT [NAME]

Question 131

What would be a good wording for a proposal to instruct a new director? It was noted that there was a proposal to appoint [INSERT NAME] as director of the Company. The directors, having regard to their statutory and other duties agreed that appointing [NAME] as a director would promote the success of the Company for the benefit of the members and IT WAS RESOLVED THAT [NAME], ?????????????????, be appointed as a director of the Company with immediate effect.

Answer 131

having consented to act

Question 132

What would be a good wording for a proposal to instruct a new director? It was noted that there was a proposal to appoint [INSERT NAME] as director of the Company. The directors, having regard to their statutory and other duties agreed that appointing [NAME] as a director would promote the success of the Company for the benefit of the members and IT WAS RESOLVED THAT [NAME], having consented to act, ?????????????????????

Answer 132

be appointed as a director of the Company with immediate effect.

Question 133

Which legislation should be referred to with regard to declaring an interest in a transaction?

Answer 133

s177 Companies Act 2006

Question 134

How should a declaration of interest in a transaction be referred to within board minutes?

Answer 134

[NAME OF DIRECTOR] declared their interest in matters to be discussed at this meeting in accordance with section 177 of the Companies Act 2006 and the Company’s Articles of Association as follows:-

Question 135

If it is noted that a director may still be counted towards quorum and permitted to vote on a matter regardless of an interest in it, how should this be worded in the minutes?

Answer 135

It was noted that a director who had declared an interest under section 177 of the Companies Act 2006 was permitted under the company’s Articles of Association to be counted as participating in the decision making process on such issue for quorum and voting purposes.

Question 136

How could a potential transfer of shares be recorded in business minutes?

Answer 136

A duly stamped and executed stock transfer form in respect of the transfer of 30,000 £1 ordinary shares in the Company by [NAME] to [NAME] (“the Transfer”) was produced in the meeting, together with the share certificate relating to those shares.

Question 137

If the board resolve to approve the transfer of shares then how should this be recorded in business minutes?

Answer 137

IT WAS RESOLVED THAT the Transfer be approved and the Company Secretary be directed to enter [NAME] into the Register of Members immediately and issue a duly executed share certificate to [NAME].

Question 138

With regard to directors, which registers need to be kept up to date?

Answer 138

Register of directors Directors residential addresses Register of people with significant control

Question 139

What would be suitable wording to send via written resolution regarding a change of company's name?

Answer 139

SPECIAL RESOLUTION That pursuant to s77 Companies Act 2006 the Company's name be changed to....

Question 140

What should be immediately underneath a proposed resolution in a written resolution?

Answer 140

Signature line and member / shareholder's name

Question 141

What information must be in a written resolution in addition to the resolution itself?

Answer 141

How to approve Where to sign How to return to registered office, by post or by hand Lapse date

Question 142

How many days should the lapse date be on a written resolution?

Answer 142

28 days

Question 143

How many days is a lapse date in a written resolution, when taking into account any necessary clear days and postal days?

Answer 143

It's still 28. There's no need for clear days or postal days (deemed delivery) in lapse dates.

Question 144

Which type of resolution can NOT be used in a written resolution?

Answer 144

Removal of a director.

Question 145

Other than removal of director what circumstances would mean that a written resolution could likely be a waste of time?

Answer 145

Where there is uncertainty as to whether it would pass. This is because it could cause unnecessary delay.

Question 146

Business mediums - liability General partnership - what is the partners liability?

Answer 146

Full and unlimited. Joint and several.

Question 147

Business mediums - liability Limited partnership - what is the partners liability?

Answer 147

At least one - the general partner - has unlimited liability. The other partners have liability that is limited to the level of their investment.

Question 148

Business mediums - liability LLP - what is the partners liability?

Answer 148

Each partner is liable to the level of their investment Separate legal entity

Question 149

Business mediums - liability Private limited company - what is the directors / shareholders liability?

Answer 149

Directors - none (they're effectively employees) Shareholders - limited to the level of their investment Separate legal entity

Question 150

Business mediums - Partnerships How is a partnership formed - what is the test?

Answer 150

A relationship that exists between persons carrying on the business in common, with a view to profit.

Question 151

Business mediums - Partnerships Does a partnership need to have made profit in order to come in to existence?

Answer 151

No, only the intention to do so.

Question 152

Business mediums - Partnerships What would count as prima facie evidence that a partnership existed?

Answer 152

An agreement to share profits.

Question 153

Business mediums - Partnerships Does receiving a wage prove that a partnership exists?

Answer 153

No

Question 154

Business mediums - Partnerships Does working on commission prove that a partnership exists?

Answer 154

No

Question 155

Business mediums - Partnerships If there is an agreement to repay a debt, does this prove a partnership exists?

Answer 155

No

Question 156

Business mediums - Partnerships If an agreement to share losses exists, does this prove a partnership exist?

Answer 156

It can do / can be considered evidence.

Question 157

Business mediums - Partnerships Does that absence of an agreement to share losses prevent the formation of a partnership?

Answer 157

No

Question 158

Business mediums - Partnerships Does owning property together and sharing gross returns create a partnership?

Answer 158

No

Question 159

Business mediums - Partnerships Does giving money to a partnership create a partnership?

Answer 159

No

Question 160

Business mediums - Partnerships Does the formation of a partnership need to be in writing?

Answer 160

No, can be oral, but obviously written does help.

Question 161

Business mediums - Partnerships Each partner is an agent of the partnership. What is the difference between actual authority and implied (ostensible) authority when acting as an agent for the partnership?

Answer 161

Actual authority - partner believes they have it. Could be expressly, via partnership agreement or vote Implied ACTUAL authority can also arise through a course of dealings.

Question 162

Business mediums - Partnerships Other than liabilities, what is the other difference between general and limited partnerships?

Answer 162

In general partnerships all partners are equal. In limited partnerships the one who has unlimited liability is not involved in the management.

Question 163

Business mediums - Partnerships When assessing whether a partnership is bound in a transaction, what factors will be considered?

Answer 163

Whether the act is related to the firm's business Is this transaction one a partner of this type in a firm would have authority to do? Both are objective tests.

Question 164

Business mediums - Partnerships Is a firm bound where the partner acted with no actual authority?

Answer 164

NOT if they actually had no authority -AND EITHER- The third party knew this [subjective test] or did not know they were a partner.

Question 165

Business mediums - Partnerships What happens when a partner acts with apparent authority - is the partnership still bound?

Answer 165

Yes, but the other partners can pursue partner for contractual losses.

Question 166

Business mediums - Partnerships Is the partnership liable for a partner's tort committed during the course of partnership business?

Answer 166

Yes Example - fraudulent misrepresentation.

Question 167

Business mediums - Partnerships Is a partner liable for partnership debts, before, during and after leaving the partnership?

Answer 167

Before - no. During - yes After - yes, unless given correct notice.

Question 168

Business mediums - Partnerships What is the effect of a hold harmless agreement on liability after a partner has left?

Answer 168

It's only valid internally, between the partners. The firm / partner is still liable to the claim.

Question 169

Business mediums - Partnerships What is the correct notice, that will relieve a partner of liability?

Answer 169

Actual notice is given by advertisement in London Gazette (protects from new creditors). Obviously also take themself off any headed notepaper / website.

Question 170

Business mediums - Partnerships What is the effect on liability if someone holds themself out as a partner?

Answer 170

They might be liable for partnership debts!

Question 171

Business mediums - Partnerships Is it possible to buy into a partnership with property rather than money?

Answer 171

Yes. There will need to be an agreement to do so, and the property becomes partnership property.

Question 172

Business mediums - Partnerships Does the use of a partner's property mean it becomes partnership property?

Answer 172

No. There is no intention for it to become partnership property.

Question 173

Business mediums - Partnerships What factors are considered in deciding on whether a partner's property had, in fact, become partnership property?

Answer 173

Courts look at who pays maintenance, who uses it, was it also used for personal purposes?

Question 174

Business mediums - Partnerships Is partnership property available to the creditor of an individual partner to satisfy their debt?

Answer 174

No.

Question 175

Business mediums - Partnerships If there is no profit sharing agreement, how is the profit shared?

Answer 175

Equally.

Question 176

Business mediums - Partnerships If a partnership agreement deals with how profits are shared, but not losses, are the losses shared equally?

Answer 176

No, they're shared in the same way that the profits are.

Question 177

Business mediums - Partnerships Can creditors go after any partner?

Answer 177

Yes, as liability is joint and several.

Question 178

Business mediums - Partnerships In a Limited partnership, who is liable - General partners or limited partners?

Answer 178

In a limited partnership, general partners have unlimited liability, so are personally liable for the partnership's debt. Limited partners have limited liability, meaning their liability is capped at the amount they invested in the partnership

Question 179

Business mediums - Partnerships If a partnership fails, what is the position with regard to HMRC?

Answer 179

They are still owed the tax, and so can pursue any of the partners - who will be taxed directly anyway.

Question 180

Business mediums - Partnerships When can a partner take profit from the business?

Answer 180

By agreement, or by the partnership agreement. Can't simply take it.

Question 181

Business mediums - Partnerships Can a partner have their share paid to someone else?

Answer 181

Yes, but it doesn't make that person a partner.

Question 182

Business mediums - Partnerships How does voting happen in a partnership?

Answer 182

Mostly by majority vote. All rights are equal unless the agreement says otherwise.

Question 183

Business mediums - Partnerships What exceptions are there to majority vote in partnership? (4)

Answer 183

Admitting a new partner Changing nature of business Amending partnership agreement Expulsion of partner (unless partnership agreement says otherwise. Each of these requires a unanimous vote. this is the same for partnerships and LLPs.

Question 184

Business mediums - Partnerships What exceptions are there to majority vote in partnership? (4) ???????? partner Changing nature of business Amending partnership agreement Expulsion of partner (unless partnership agreement says otherwise. Each of these requires a unanimous vote.

Answer 184

Admitting a new

Question 185

Business mediums - Partnerships What exceptions are there to majority vote in partnership? (4) Admitting a new partner ??????????? of business Amending partnership agreement Expulsion of partner (unless partnership agreement says otherwise. Each of these requires a unanimous vote.

Answer 185

Changing nature

Question 186

Business mediums - Partnerships What exceptions are there to majority vote in partnership? (4) Admitting a new partner Changing nature of business Amending ????????????? Expulsion of partner (unless partnership agreement says otherwise. Each of these requires a unanimous vote.

Answer 186

partnership agreement

Question 187

Business mediums - Partnerships What exceptions are there to majority vote in partnership? (4) Admitting a new partner Changing nature of business Amending partnership agreement ????????? of partner (unless partnership agreement says otherwise. Each of these requires a unanimous vote.

Answer 187

Expulsion

Question 188

Business mediums - Partnerships What duties do partners have towards the business / each other? (4)

Answer 188

Render true and full accounts Provide full information on anything Accounts for all profits made in the name of the partnership Refrain from competing with partnership

Question 189

Business mediums - Partnerships What duties do partners have towards the business / each other? (4) Render true and full ????????? Provide full information on anything Accounts for all profits made in the name of the partnership Refrain from competing with partnership

Answer 189

accounts

Question 190

Business mediums - Partnerships What duties do partners have towards the business / each other? (4) Render true and full accounts Provide full information on ???????? Accounts for all profits made in the name of the partnership Refrain from competing with partnership

Answer 190

anything

Question 191

Business mediums - Partnerships What duties do partners have towards the business / each other? (4) Render true and full accounts Provide full information on anything Accounts for all ????????????? the partnership Refrain from competing with partnership

Answer 191

profits made in the name of

Question 192

Business mediums - Partnerships What duties do partners have towards the business / each other? (4) Render true and full accounts Provide full information on anything Accounts for all profits made in the name of the partnership Refrain from ???????????

Answer 192

competing with partnership

Question 193

Business mediums - Partnerships What is the main thing which must be included in all partnership agreements upon drafting?

Answer 193

To make sure the partnership is not at will, and therefore able to be terminated immediately by one partner. Instead, put in provisions that prevent this from happening. Normally this is simply that the partnership will not end on notice, death or bankrupcty.

Question 194

Business mediums - Partnerships Can a partnership document reflect that the partnership is to last for a finite amount of time, say 5 years?

Answer 194

Yes.

Question 195

Business mediums - Partnerships Other than notice given by a partner, what two other events would automatically end the partnership unless altered in the partnership agreement?

Answer 195

Death of a partner Bankruptcy of a partner

Question 196

Business mediums - Partnerships Can a court dictate that a partnership is dissolved?

Answer 196

Yes.

Question 197

Business mediums - Partnerships What liabilities do the partners have whilst the business is being dissolved?

Answer 197

They are still liable while it's being dissolved. They must not take on any new work.

Question 198

Business mediums - Partnerships How are finances distributed upon dissolution of a partnership? (4)

Answer 198

Wind up business and pay off debts Repay partner's loans Repay partner's capital Distribution in accordance with the agreement (or equally if no agreement).

Question 199

Business mediums - Partnerships How are finances distributed upon dissolution of a partnership? (4) ?????????? business and pay off debts Repay partner's loans Repay partner's capital Distribution in accordance with the agreement (or equally if no agreement).

Answer 199

Wind up

Question 200

Business mediums - Partnerships How are finances distributed upon dissolution of a partnership? (4) Wind up business and pay off debts Repay partner's ???? Repay partner's capital Distribution in accordance with the agreement (or equally if no agreement).

Answer 200

loans

Question 201

Business mediums - Partnerships How are finances distributed upon dissolution of a partnership? (4) Wind up business and pay off debts Repay partner's loans Repay partner's ???????? Distribution in accordance with the agreement (or equally if no agreement).

Answer 201

capital

Question 202

Business mediums - Partnerships How are finances distributed upon dissolution of a partnership? (4) Wind up business and pay off debts Repay partner's loans Repay partner's capital Distribution ???????????????

Answer 202

in accordance with the agreement (or equally if no agreement).

Question 203

Business mediums - LLPs How does a LLP differ from a regular partnership?

Answer 203

It is a legal entity in its own right, similar to a company. Requires incorporation. Does not pay its own taxes.

Question 204

Business mediums - LLPs What documentation is needed to incorporate a LLP? (3)

Answer 204

i. Document showing at least two members with their name and address. ii. Name of LLP and address of registered office iii. People with significant control 25% of assets / voting rights or other right to control). Note: A partnership agreement is NOT required, so is not needed to be sent in.

Question 205

Business mediums - LLPs What documentation is needed to incorporate a LLP? (3) i. Document showing at least ????????????? ii. Name of LLP and address of registered office iii. People with significant control 25% of assets / voting rights or other right to control). Note: A partnership agreement is NOT required, so is not needed to be sent in.

Answer 205

two members with their name and address.

Question 206

Business mediums - LLPs What documentation is needed to incorporate a LLP? (3) i. Document showing at least two members with their name and address. ii. Name of LLP and ????????????? iii. People with significant control 25% of assets / voting rights or other right to control). Note: A partnership agreement is NOT required, so is not needed to be sent in.

Answer 206

address of registered office

Question 207

Business mediums - LLPs What documentation is needed to incorporate a LLP? (3) i. Document showing at least two members with their name and address. ii. Name of LLP and address of registered office iii. People with ?????????????? Note: A partnership agreement is NOT required, so is not needed to be sent in.

Answer 207

significant control 25% of assets / voting rights or other right to control).

Question 208

Business mediums - LLPs Is a partnership agreement required?

Answer 208

No, not in a LLP.

Question 209

Business mediums - LLPs For how long can a LLP continue with one person?

Answer 209

6 months, after which the sole partner becomes jointly and severally liable with the business for its debts.

Question 210

Business mediums - LLPs If one person leaves, dies or is made bankrupt does the partnership cease?

Answer 210

No.

Question 211

Business mediums - LLPs Requirement to add partners?

Answer 211

Unanimous vote.

Question 212

Business mediums - LLPs How does actual and implied authority bind the partnership?

Answer 212

Exactly the same as regular partnerships. Actual authority = fine, implied = comes with some limitations ie Whether the act is related to the firm's business Is this transaction one a partner of this type in a firm would have authority to do?

Question 213

Business mediums - LLPs How are profits shared?

Answer 213

Equally, by default.

Question 214

Business mediums - LLPs Does a partner have an entitlement to be paid for their work for the LLP?

Answer 214

No, but they can claim expenses. Their payment is in the form of their share of the partnership profit.

Question 215

Business mediums - LLPs What entitlement do partners have? (2)

Answer 215

Inspect books and records Right to manage (but no obligation to do so)

Question 216

Business mediums - LLPs What are the duties of partners? (3)

Answer 216

i. Refrain from competing ii. Refrain from profiting off LLP’s name or property iii. Account to LLP for any profits.

Question 217

Business mediums - LLPs What are the duties of partners? (3) Refrain from ?????? Refrain from profiting off LLP’s name or property Account to LLP for any profits.

Answer 217

competing

Question 218

Business mediums - LLPs What are the duties of partners? (3) Refrain from competing Refrain from profiting off LLP’s ????????? Account to LLP for any profits.

Answer 218

name or property

Question 219

Business mediums - LLPs What are the duties of partners? (3) Refrain from competing Refrain from profiting off LLP’s name or property Account to LLP for ???????

Answer 219

any profits.

Question 220

Business mediums - LLPs What are the liabilities of partners in a LLP? (3)

Answer 220

i. Members cannot be pursued for liability OR wrongful acts or omissions by fellow members. ii. Only liable for amount in CAPITAL CONTRIBUTION, personal wealth protection. iii. Wrongful and fraudulent trading CAN mean personal liability.

Question 221

Business mediums - LLPs What are the liabilities of partners in a LLP? (3) i. Members ????????????? for liability OR wrongful acts or omissions by fellow members. ii. Only liable for amount in CAPITAL CONTRIBUTION, personal wealth protection. iii. Wrongful and fraudulent trading CAN mean personal liability.

Answer 221

cannot be pursued

Question 222

Business mediums - LLPs What are the liabilities of partners in a LLP? (3) i. Members cannot be pursued for liability OR wrongful acts or omissions by fellow members. ii. Only liable for amount ?????????????, personal wealth protection. iii. Wrongful and fraudulent trading CAN mean personal liability.

Answer 222

in CAPITAL CONTRIBUTION

Question 223

Business mediums - LLPs What are the liabilities of partners in a LLP? (3) i. Members cannot be pursued for liability OR wrongful acts or omissions by fellow members. ii. Only liable for amount in CAPITAL CONTRIBUTION, personal wealth protection. iii. Wrongful and fraudulent trading ????????????

Answer 223

CAN mean personal liability.

Question 224

Business mediums - Companies What is unique about public limited companies as far as the SQE goes?

Answer 224

They are the only medium which allows shares to be sold publicly / on stock exchange.

Question 225

Business mediums - Private limited companies What is a company limited by guarantee?

Answer 225

Shareholders liability is limited by amount they guarantee – usually charities

Question 226

Business mediums - Private limited companies What is the role of a promoter?

Answer 226

Sets up the business and administration prior to incorporation. They are liable for any contracts entered into before the company is incorporated.

Question 227

Business mediums - Private limited companies In what single way may the promoter be substituted for the company, after incorporation?

Answer 227

By all three parties (promoter, company, third party) agreeing to do so - known as novation.

Question 228

Business mediums - Private limited companies Can accountants and solicitors be promoters?

Answer 228

Not if they're operating on behalf of someone else, ie working to incorporate someone else's business.

Question 229

Business mediums - Private limited companies What are shelf companies?

Answer 229

Already up and running. Take off the shelf. Allows very quick way of getting a company running.

Question 230

Business mediums - Private limited companies What restrictions are there with regard to naming?

Answer 230

Can't be the same as another company Can't be offensive Must have Limited or Ltd in name. Can't suggest connection to Govt or LA unless approved. Subsequent name change requires special resolution.

Question 231

Business mediums - Private limited companies What filing requirements are there for incorporation? (9)

Answer 231

Name of company Location of registered office Details of company business Whether limited by shares or guarantee Statement of capital and shareholdings Statement of proposed officers / directors Details of those with significant control Statement of compliance with companies Act 2006 Relevant fee

Question 232

Business mediums - Private limited companies What filing requirements are there for incorporation? (9) ??????? of company Location of registered office Details of company business Whether limited by shares or guarantee Statement of capital and shareholdings Statement of proposed officers / directors Details of those with significant control Statement of compliance with companies Act 2006 Relevant fee

Answer 232

Name

Question 233

Business mediums - Private limited companies What filing requirements are there for incorporation? (9) Name of company Location of ??????? Details of company business Whether limited by shares or guarantee Statement of capital and shareholdings Statement of proposed officers / directors Details of those with significant control Statement of compliance with companies Act 2006 Relevant fee

Answer 233

registered office

Question 234

Business mediums - Private limited companies What filing requirements are there for incorporation? (9) Name of company Location of registered office Details of ???????? Whether limited by shares or guarantee Statement of capital and shareholdings Statement of proposed officers / directors Details of those with significant control Statement of compliance with companies Act 2006 Relevant fee

Answer 234

company business

Question 235

Business mediums - Private limited companies What filing requirements are there for incorporation? (9) Name of company Location of registered office Details of company business Whether limited by ?????????????? Statement of capital and shareholdings Statement of proposed officers / directors Details of those with significant control Statement of compliance with companies Act 2006 Relevant fee

Answer 235

shares or guarantee

Question 236

Business mediums - Private limited companies What filing requirements are there for incorporation? (9) Name of company Location of registered office Details of company business Whether limited by shares or guarantee Statement of ???????????? Statement of proposed officers / directors Details of those with significant control Statement of compliance with companies Act 2006 Relevant fee

Answer 236

capital and shareholdings

Question 237

Business mediums - Private limited companies What filing requirements are there for incorporation? (9) Name of company Location of registered office Details of company business Whether limited by shares or guarantee Statement of capital and shareholdings Statement of proposed ??????????? Details of those with significant control Statement of compliance with companies Act 2006 Relevant fee

Answer 237

officers / directors

Question 238

Business mediums - Private limited companies What filing requirements are there for incorporation? (9) Name of company Location of registered office Details of company business Whether limited by shares or guarantee Statement of capital and shareholdings Statement of proposed officers / directors Details of those with ????????? Statement of compliance with companies Act 2006 Relevant fee

Answer 238

significant control

Question 239

Business mediums - Private limited companies What filing requirements are there for incorporation? (9) Name of company Location of registered office Details of company business Whether limited by shares or guarantee Statement of capital and shareholdings Statement of proposed officers / directors Details of those with significant control Statement of compliance with ??????????? Relevant fee

Answer 239

companies Act 2006

Question 240

Business mediums - Private limited companies What filing requirements are there for incorporation? (9) Name of company Location of registered office Details of company business Whether limited by shares or guarantee Statement of capital and shareholdings Statement of proposed officers / directors Details of those with significant control Statement of compliance with Companies Act 2006 Relevant ????

Answer 240

fee

Question 240

Business mediums - Private limited companies Formation: What information should be in the application to incorporate in terms of statement of capital and shareholdings? (4)

Answer 240

1. Number of shares 2. Value of shares 3. If the shares are to be divided into classes, a description of each class 4. The amount that will be paid up by shareholders

Question 241

Business mediums - Private limited companies Formation: What information should be in the application to incorporate in terms of statement of capital and shareholdings? (4) 1. Number of ????? 2. Value of shares 3. If the shares are to be divided into classes, a description of each class 4. The amount that will be paid up by shareholders

Answer 241

shares

Question 242

Business mediums - Private limited companies Formation: What information should be in the application to incorporate in terms of statement of capital and shareholdings? (4) 1. Number of shares 2. Value of ?????? 3. If the shares are to be divided into classes, a description of each class 4. The amount that will be paid up by shareholders

Answer 242

shares

Question 243

Business mediums - Private limited companies Formation: What information should be in the application to incorporate in terms of statement of capital and shareholdings? (4) 1. Number of shares 2. Value of shares 3. If the shares are to be divided into ????????? 4. The amount that will be paid up by shareholders

Answer 243

classes, a description of each class

Question 244

Business mediums - Private limited companies Formation: What information should be in the application to incorporate in terms of statement of capital and shareholdings? (4) 1. Number of shares 2. Value of shares 3. If the shares are to be divided into classes, a description of each class 4. The amount that will be ???????????

Answer 244

paid up by shareholders

Question 245

Business mediums - Private limited companies Breaching the articles of association is a breach of duty to ______________ ?

Answer 245

The company

Question 246

Business mediums - Private limited companies The articles of association serves as a contract between who? (2)

Answer 246

Company and shareholders Shareholders with each other

Question 247

Business mediums - Private limited companies Which articles of association can the shareholders enforce?

Answer 247

Only those relating to their membership rights.

Question 248

Business mediums - Private limited companies Can shareholders enter into agreements apart from the articles?

Answer 248

Yes, and they are binding and enforceable by all who sign them.

Question 249

Business mediums - Private limited companies What is entrenchment?

Answer 249

Articles that shareholders have decreed will require MORE than 75% (special resolution) in order to pass.

Question 250

Business mediums - Private limited companies If there is to be any articles subject to entrenchment, where would these be registed?

Answer 250

At companies house.

Question 251

Business mediums - Private limited companies What is the legal position of any amendment within the articles that prevents amendment of the articles?

Answer 251

It will be ineffective.

Question 252

Business mediums - Private limited companies What rights do shareholders have if they wish to challenge any alteration being proposed that they don't agree with?

Answer 252

Take it up with court. The change must be that the change is one which no reasonable person would consider for the benefit of the company.

Question 253

Business mediums - Private limited companies What rights do shareholders have if they wish to challenge any alteration being proposed that they don't agree with because it would affect their rights as minority shareholders?

Answer 253

It will not be effective.

Question 254

Business mediums - Private limited companies Under which conditions will a court pierce the corporate veil? (2)

Answer 254

The company is involved in fraud To avoid existing obligations (ie transferring assets to a company to avoid giving them to creditors)

Question 255

Companies, Directors and Officers What is the minimum number of directors for private and public companies?

Answer 255

Private 1, public 2. Public must also have a secretary. All must be natural persons 16+

Question 256

Companies, Directors and Officers Who can appoint new directors?

Answer 256

Either directors or shareholders

Question 257

Companies, Directors and Officers What is a de facto director?

Answer 257

Acts like one, but has never been appointed.

Question 258

Companies, Directors and Officers What is an executive director?

Answer 258

Day to day, usually employees.

Question 259

Companies, Directors and Officers What is a non executive director?

Answer 259

Usually consultants, overseeing executive directors.

Question 260

Companies, Directors and Officers What is a shadow director?

Answer 260

Influences others, but does not claim to be a director and has never been appointed.

Question 261

Companies, Directors and Officers What is the difference between a de facto director and a shadow director?

Answer 261

Neither have ever been appointed. De facto acts like one, shadow does not.

Question 262

Companies, Directors and Officers What is a nominee director?

Answer 262

Appointed by the board to represent the interests of a specific stakeholder (often a shareholder). Must still act in best interest of the company.

Question 263

Companies, Directors and Officers Can directors change articles?

Answer 263

No, that requires shareholders.

Question 264

Companies, Directors and Officers Can directors exercise powers individually?

Answer 264

Not really, they're supposed to operate as a board.

Question 265

Companies, Directors and Officers Can apparent authority bind the company?

Answer 265

Yes, but would need at least 3.

Question 266

Companies, Directors and Officers Can the board delegate power to individual directors?

Answer 266

Yes.

Question 267

Companies, Directors and Officers How do companies actually execute documents?

Answer 267

By affixing the seal, or signatures of two directors, or one director and witness.

Question 268

Companies, Directors and Officers What is the fiduciary duty that directors have towards a company?

Answer 268

To act in good faith and in best interest of company.

Question 269

Companies, Directors and Officers Can the articles of association be altered to indemnify a director for breach of duty, negligence or breach of trust?

Answer 269

No. Any such provision would be void.

Question 270

Companies, Directors and Officers What can a company do to protect itself against liability of the directors breach?

Answer 270

Purchase insurance.

Question 271

Companies, Directors and Officers In what circumstances can a company indemnify the actions of a director in claims by third parties?

Answer 271

Any and all actions except criminal charges and regulatory fines.

Question 272

Companies, Directors and Officers What are the factors used for deciding if a director's actions were in the company's best interests? (5)

Answer 272

Maximising profits Interests of shareholders Interests of suppliers Customers The community

Question 273

Companies, Directors and Officers What are the factors used for deciding if a director's actions were in the company's best interests? (5) Maximising ??????? Interests of shareholders Interests of suppliers Customers The community

Answer 273

profits

Question 274

Companies, Directors and Officers What are the factors used for deciding if a director's actions were in the company's best interests? (5) Maximising profits Interests of ??????? Interests of suppliers Customers The community

Answer 274

shareholders

Question 275

Companies, Directors and Officers What are the factors used for deciding if a director's actions were in the company's best interests? (5) Maximising profits Interests of shareholders Interests of ??????? Customers The community

Answer 275

suppliers

Question 276

Companies, Directors and Officers What are the factors used for deciding if a director's actions were in the company's best interests? (5) Maximising profits Interests of shareholders Interests of suppliers ????????? of the business The community

Answer 276

Customers

Question 277

Companies, Directors and Officers What changes with regard to the directors when the company is on the brink os insolvency?

Answer 277

They then have to consider the best interests of the creditors rather than the shareholders.

Question 278

Companies, Directors and Officers What are the factors used for deciding if a director's actions were in the company's best interests? (5) Maximising profits Interests of shareholders Interests of suppliers Customers The ???????

Answer 278

community

Question 279

Companies, Directors and Officers What is taken into account when considering the diligence of the director - specifically their knowledge, skill and experience? (2)

Answer 279

Objective test: that the knowledge skill and experience that reasonably may be expected of such a person Subjective test: that the knowledge skill and experience the director in question actually has.

Question 280

Companies, Directors and Officers Is it a conflict of interest if the matter has been authorised by the directors after receiving full disclosure?

Answer 280

No

Question 281

Companies, Directors and Officers May a director receive a benefit from a third party by reason of them being a director?

Answer 281

No

Question 282

Companies, Directors and Officers May a director receive a loan from the company?

Answer 282

Yes if the matter is approved by the shareholders. Note: If the loan is for a small amount, shareholders permission may not be required.

Question 283

Is it a breach of duty if there is a transaction between director and the company, and the board is aware?

Answer 283

No

Question 284

What is the required notice period for a meeting of the board of directors?

Answer 284

'Reasonable'

Question 285

What details should be given to directors ahead of a board meeting?

Answer 285

Date / time / location

Question 286

Do meetings of the board of directors need to be in person?

Answer 286

No. Any medium where the directors can communicate is ok, ie zoom call.

Question 287

How are decisions made by a board of directors?

Answer 287

Majority vote.

Question 288

Can board of directors make written resolutions?

Answer 288

Yes, but need to be unanimously agreed.

Question 289

Under the model articles can a director be involved in a decision about their own contract?

Answer 289

No

Question 290

What is a Bushell v Faith clause?

Answer 290

One that gives a director-shareholder more voting weight.

Question 291

If a company wishes to remove a director, would the director have rights under contract law or the model articles?

Answer 291

Contract law. Under the model articles a director can be removed without cause.

Question 292

What is the process required for proper removal of director?

Answer 292

28 days notice of a meeting Director must be notified of right to respond in writing and orally at such meeting.

Question 293

What is different about the first annual meeting at a Public Limited company?

Answer 293

All the initially appointed directors must resign and seek reappointment

Question 294

When would a director be disqualified?

Answer 294

Bankruptcy, Indictable offence or fraudulent trading.

Question 295

Who would count with regard to the requirements for a company secretary?

Answer 295

Been a company secretary for 3 years Member of regulatory body Barrister or solicitor Officer of the company?

Question 296

Which type of company must have a secretary?

Answer 296

Public limited company

Question 297

What additional measures are required for a large company with regard to filing accounts?

Answer 297

Large companies must have their accounts audited.

Question 298

What constitutes a large company?

Answer 298

Annual turnover £10M+, and more than 50 employees.

Question 299

Who receives dividends?

Answer 299

Shareholders. Note: Directors that are also shareholders count, but people that are just directors will not take them.

Question 300

From which pot of money are dividends paid?

Answer 300

Profits.

Question 301

What is the difference between ordinary and preference shares?

Answer 301

Ordinary shares confer voting rights and ownership. Preference shares are prioritised for a dividend, and the return of capital in the case of liquidators.

Question 302

Who recommends the dividend amount?

Answer 302

Directors

Question 303

What rights to the shareholders have in relation to dividends?

Answer 303

They can approve a smaller divided but not a larger one.

Question 304

What can a shareholder do if they believe a director has breached their duty, or is about to?

Answer 304

First step is to approach the board to see if they will assert their right to prevent or remedy. If this doesn't work then they will need to bring a derivative claim against the director, to the court.

Question 305

What are two reasons (as far as the SQE goes) that minority shareholders may bring claims to the court?

Answer 305

By being excluded from decision making by majority shareholders Where majority shareholders are paying themselves excessively.

Question 306

What is the most common remedy imposed by the court for when a minority shareholder feels marginalised by the actions of the majority shareholders?

Answer 306

Force majority shareholders to buy our minor shareholder's interest at fair value.

Question 307

Under what conditions can any shareholder apply to have the company wound up?

Answer 307

If it is solvent. If the shareholder can show it is just and equitable to do so.

Question 308

Who can call general meetings?

Answer 308

Directors Shareholders owning shares to the value of 5% of voting share capital.

Question 309

If shareholders require a meeting, what are the timelines with which the directors must adhere?

Answer 309

Must call the meeting within 21 days, and hold it within 28 days.

Question 310

For short notice general meetings (note: not board meetings), what percentage of the shareholders worth of shares is required to be in favour?

Answer 310

90%

Question 311

Can a shareholder's proxy count towards quorum?

Answer 311

No

Question 312

Under which method are votes usually taken at a general meeting?

Answer 312

Show of hands.

Question 313

What is required in order to switch the voting method to poll voting?

Answer 313

5 shareholders require it, or, those with at least 10% of the shares call for it.

Question 314

How does poll voting differ from regular voting?

Answer 314

It is one vote per share, so favours those shareholders with a larger portion of shares.

Question 315

Is a written resolution a third type of resolution?

Answer 315

No, it is just an ordinary or special resolution passed in a different way

Question 316

Which type of resolution is required to:- Appoint or remove a director?

Answer 316

Ordinary.

Question 317

Is an ordinary resolution always required to appoint a director?

Answer 317

No. Whilst an ordinary resolution is the most common way to do it, the directors can also appoint further directors under the model articles.

Question 318

Is an ordinary resolution required to approve dividends?

Answer 318

Yes.

Question 319

is an ordinary resolution required to allot shares?

Answer 319

Yes

Question 320

What counts as a substantial property transaction for a business? (2)

Answer 320

Either Exceeds 10% net asset value of company - AND- is more than £5k. Or Exceeds £100k

Question 321

What counts as a substantial property transaction for a business? (2) Either Exceeds ?????? net asset value of company - AND- is more than £5k. Or Exceeds £100k

Answer 321

10%

Question 322

What counts as a substantial property transaction for a business? (2) Either Exceeds 10% net asset value of company - AND- is more than??????? Or Exceeds £100k

Answer 322

£5k.

Question 323

What counts as a substantial property transaction for a business? (2) Either Exceeds 10% net asset value of company - AND- is more than £5k. Or Exceeds???????

Answer 323

£100k

Question 324

Can shareholders require a written resolution?

Answer 324

Yes, if those with 5% of the voting rights insist.

Question 325

Within how long will a written resolution lapse under the model articles?

Answer 325

28 days.

Question 326

Which type of resolution is required to ratify a director's breach of duty?

Answer 326

Ordinary resolution.

Question 327

What are the most typical breaches of a director's duty? (3)

Answer 327

Not acting in best interest of the company Making gains for themselves by using the name of the company Accepting gifts or benefits without proper disclosure

Question 328

What are the most typical breaches of a director's duty? (3) Not acting ????????? of the company Making gains for themselves by using the name of the company Accepting gifts or benefits without proper disclosure

Answer 328

in best interest

Question 329

What are the most typical breaches of a director's duty? (3) Not acting in best interest of the company Making ????????????? of the company Accepting gifts or benefits without proper disclosure

Answer 329

gains for themselves by using the name

Question 330

What are the most typical breaches of a director's duty? (3) Not acting in best interest of the company Making gains for themselves by using the name of the company ???????????????? without proper disclosure

Answer 330

Accepting gifts or benefits

Question 331

What type of resolution is required to enter into a contract with a director?

Answer 331

None, if less than 2 years.

Question 332

What type of resolution is required to enter into a contract with a director that is for more than 2 years?

Answer 332

Ordinary resolution

Question 333

What type of resolution is required to amend the articles of association?

Answer 333

Special.

Question 334

What type of resolution is required to make a loan with a director?

Answer 334

Ordinary

Question 335

What type of resolution is required to accept a payment for loss of office?

Answer 335

Ordinary

Question 336

What type of resolution is required to buy back company shares from capital?

Answer 336

Special.

Question 337

Which type of resolution is required to disapply pre-emption rights?

Answer 337

Special

Question 338

What are pre emption rights?

Answer 338

That new shares must be offered to existing shareholders first, so that they have the opportunity to purchase more and maintain their voting power within the company.

Question 339

If a resolution affects information held at companies house, within how long must a copy be filed?

Answer 339

14 days.

Question 340

Which filings at companies house are required within 15 days, rather than the standard 14 days?

Answer 340

Changes to articles of association Special resolutions Note: Charges and mortgages are neither - they are within 21 days.

Question 341

What is the difference between debt financing and equity financing?

Answer 341

Debt financing involves borrowing money that must be repaid with interest, while equity financing involves selling ownership in a company for funds. Debt financing doesn't dilute ownership but requires regular repayments, while equity financing does dilute ownership but doesn't require repayments.

Question 342

What is debt financing?

Answer 342

Borrowing money in a typical loan way - ie - must be repaid with interest. Involves regular payments.

Question 343

What is equity financing?

Answer 343

Selling more shares usually - will dilute ownership but does require regular payments or interest.

Question 344

Under what conditions can directors allot additional shares without ordinary resolution?

Answer 344

Where there is just one class of shares, and no other restrictions in the articles. Anything else requires ordinary resolution.

Question 345

What is a share premium?

Answer 345

Funds received that are above the nominal share value, and is held in a separate account.

Question 346

Pre-emption rights - what price should the additional shares be sold out?

Answer 346

Open market value.

Question 347

Pre-emption rights - how long should existing shareholders be given to purchase additional shares?

Answer 347

14 days.P

Question 348

Pre-emption rights - is this right upheld where shares are issued to someone else for non-cash consideration?

Answer 348

No

Question 349

Pre-emption rights - do these apply when preference shares are issued?

Answer 349

No

Question 350

Pre-emption rights - how can they be disapplied?

Answer 350

Via special resolution.

Question 351

In a private company, what limitations are placed on shareholders with regard to selling their shares?

Answer 351

Directors can refuse to register any transfers. This is understandable as it could result in someone becoming a shareholder who the company would not want.

Question 352

What are the two type of loans are directors able to obtain under the model articles?

Answer 352

Unsecured - a promise to repay the money borrowed, by contract Secured - a promise to pay, coupled with the right of lender to take property specified in the loan, should it not be repaid.

Question 353

What are the three types of secured loans?

Answer 353

Mortgage - high value assets ie buildings (usually) Fixed charge - specific item, expected to be held for a long time Floating charge - includes rotating stock

Question 354

When must charges and mortgages be registered at companies house?

Answer 354

Within 21 days.

Question 355

What happens if a floating charge pre-dates and fixed charge?

Answer 355

The fixed charge will take priority, regardless of when it was taken.

Question 356

According to the Companies Act 2006, which 5 registers are required to be held by a company?

Answer 356

Members Directors Secretaries Charges against assets People with significant control

Question 357

How long must all board and general meeting minutes be kept for?

Answer 357

At least 10 years.

Question 358

How long must all directors services contracts be kept for after they have ended?

Answer 358

At least a year.

Question 359

What is the wording that directors sign to say they believe the balance sheet and profit and loss statements are?

Answer 359

A 'true and fair view' of the company's financial year.

Question 360

What must company letterheads include?

Answer 360

Name Where registered (part of UK) Company registration number Address of registered office If naming one director, name them all.

Question 361

What must partnership letterheads include?

Answer 361

Name of partnership Each member of partnership Business address.

Question 362

What must a sole-trader's letterhead include?

Answer 362

Business name Real name Business address.

Question 363

What is the first step in insolvency?

Answer 363

Negotiate with creditor.

Question 364

What is an individual IVA? (3)

Answer 364

Agreement that the creditor accepts less, or over a longer period of time. Legally binding. Administered by insolvency practitioner (who'se fees are paid first!)

Question 365

What is an individual IVA? Agreement that the ???????????? or ???????????????? Legally binding. Administered by insolvency practitioner (who'se fees are paid first!)

Answer 365

creditor accepts less, or over a longer period of time.

Question 366

What is an individual IVA? Agreement that the creditor accepts less, or over a longer period of time. ??????????????? Administered by insolvency practitioner (who'se fees are paid first!)

Answer 366

Legally binding.

Question 367

What is an individual IVA? Agreement that the creditor accepts less, or over a longer period of time. Legally binding. Administered by ???????????? (who'se fees are paid first!)

Answer 367

insolvency practitioner

Question 368

Insolvency - Individual IVA What will the insolvency practitioner's first act be?

Answer 368

To apply to court for interim order stopping creditors being able to take action.

Question 369

Insolvency - Individual IVA When a settlement is offered to creditors, what percentage of UNSECURED creditors would need to vote in favour?

Answer 369

75% of the debt, and also, 50% OF THE creditors themselves.

Question 370

How is CGT approached in Business settings?

Answer 370

Any income is liable to be taxed but is considered as part of a company's corporation tax.

Question 371

At which point is CGT calculated?

Answer 371

When an asset is disposed of.

Question 372

How is CGT calculated?

Answer 372

The difference between sale price (market value) when disposed [PROCEEDS OF SALE] and the cost of acquiring.

Question 373

Other than the cost of acquiring an asset, what else can reduce the amount of CGT paid?

Answer 373

The cost of improvements made on the asset, and the costs of administering the asset can be used.

Question 374

For a UK based resident, are internationally based assets assessed?

Answer 374

Yes

Question 375

If a non UK resident disposes of interest in UK land, are they charged CGT?

Answer 375

Yes

Question 376

Other than land, is CGT charged where a non UK resident disposes of a UK based asset?

Answer 376

No

Question 377

What is the definition of a wasting chattel?

Answer 377

Moveable property with less than 50 years life (typically includes cars, animals, boats etc)

Question 378

Does business machinery attract CGT?

Answer 378

Yes, but the CGT is amalgamated with corporation tax.

Question 379

Are wasting chattels subject to CGT?

Answer 379

No (and as a reminder a wasting chattel is one that is moveable and with life less than 50 years)

Question 380

Above which value are are non-wasting chattels exempt from CGT?

Answer 380

£6,000

Question 381

Is CGT chargeable in transfer of property upon death?

Answer 381

No, and the recipient takes the property at market value (probate value)

Question 382

Is CGT chargeable for charities?

Answer 382

No

Question 383

If a transfer is between spouses, is CGT chargeable?

Answer 383

No, however the receiving spouse takes the property at the value the first spouse acquired it at (meaning more CGT would be payable as the value of the asset is likely to have increased since then).

Question 384

When is CGT payable?

Answer 384

By 31st Jan of the year following the gain.

Question 385

There is one type of transfer where CGT is payable within 30 days, rather than by 31st Jan of the following year - what is it?

Answer 385

Land

Question 386

The standard calculation for CGT is proceeds of sale less cost of acquisition, but when the asset is given or sold to a close relative, what figures is used instead of proceeds of sale?

Answer 386

Market value (this is because the proceeds of sale are likely to be less accurate when sold / given to someone close).

Question 387

In addition to cost of acquisition, what other costs can be offset against the proceeds of sale?

Answer 387

Legal fees, valuation fees, cost of advertising, stamp duty, commission, costs to preserve and costs to defend title etc

Question 388

What is private residence's relief?

Answer 388

PPR means CGT is reduced by 100% in cases of someone's primary residential property.

Question 389

Are Secured and preferential creditors bound by an IVA?

Answer 389

No

Question 390

What are preferential creditors?

Answer 390

Employees owed wages or holiday pay from last four months.

Question 391

What are the different names for insolvency practitioner and when do they apply?

Answer 391

Starts off IP Once interim order to stop creditors is achieved they become nominee Once IVA is in place they become known as the supervisor.

Question 392

How can someone file for bankruptcy? (3)

Answer 392

Debtor can apply themselves. Unsecured creditor owed at least £5k can apply. By supervisor of an IVA

Question 393

What is a receiver?

Answer 393

They serve as the trustee in bankruptcy. Most assets will vest with them.

Question 394

What happens with salary of the bankrupt?

Answer 394

They get to keep that.

Question 395

What cannot be taken by a receiver?

Answer 395

Furniture, clothing, tools of trade.

Question 396

What is the position in bankruptcy if there are children living at the bankrupt's house, or there are others with an equitable interest in the home?

Answer 396

The trustee in bankruptcy will need a court order. However, after 1 year the interests of any creditors will take precedence over these.

Question 397

What are the consequences of bankruptcy on an individual? (2)

Answer 397

Hard to get credit Cannot be a partner or director

Question 398

Can a bankrupt trade under another name?

Answer 398

Not unless they declare they're going / have gone bankrupt.

Question 399

For how long is a bankrupt usually prevented from being a director or partner?

Answer 399

1 year.

Question 400

Under what conditions will a bankrupt not being allowed to be a director or partner be longer than 1 year?

Answer 400

Where they were dishonest, negligent or reckless.

Question 401

What are the steps in the bankruptcy of a partnership? (4)

Answer 401

Unless the partnership agreement states otherwise, the partnership will end. Trustee in bankruptcy receives any partnership share, if any left over after all assets sold. Existing partners money is usually returned to them first. Existing partners have the option to 'buy out' the trustee in bankruptcy to keep the business going.

Question 402

What are the steps in the bankruptcy of a partnership? (4) Unless the partnership agreement states otherwise, ?????????????? Trustee in bankruptcy receives any partnership share, if any left over after all assets sold. Existing partners money is usually returned to them first. Existing partners have the option to 'buy out' the trustee in bankruptcy to keep the business going.

Answer 402

the partnership will end.

Question 403

What are the steps in the bankruptcy of a partnership? (4) Unless the partnership agreement states otherwise, the partnership will end. Trustee in bankruptcy receives any partnership share, if any left over after all assets sold. Existing partners money is ???????????????? Existing partners have the option to 'buy out' the trustee in bankruptcy to keep the business going.

Answer 403

usually returned to them first.

Question 404

What are the steps in the bankruptcy of a partnership? (4) Unless the partnership agreement states otherwise, the partnership will end. Trustee in bankruptcy receives any partnership share, if ??????????????? Existing partners money is usually returned to them first. Existing partners have the option to 'buy out' the trustee in bankruptcy to keep the business going.

Answer 404

any left over after all assets sold.

Question 405

What are the steps in the bankruptcy of a partnership? (4) Unless the partnership agreement states otherwise, the partnership will end. Trustee in bankruptcy receives any partnership share, if any left over after all assets sold. Existing partners money is usually returned to them first. Existing partners have the option to????????????????????

Answer 405

'buy out' the trustee in bankruptcy to keep the business going.

Question 406

What happens to the bankrupt's share in a partnership upon them being declared bankrupt?

Answer 406

Their share is usually sold to the remaining partners.

Question 407

What happens if all partners to a partnership are made bankrupt?

Answer 407

The official receiver applies for an order to wind up the partnership.

Question 408

Under what conditions will company directors be punished for the company becoming insolvency?

Answer 408

Where they have sought to hide assets

Question 409

What is fixed asset receivership?

Answer 409

As the name suggests it's receivership over just one item, so not a full insolvency. The creditor appoints the receiver. Often involves the company becoming insolvent as a result of the loss of the asset.

Question 410

Who does a receiver act for?

Answer 410

One, secured creditor.

Question 411

Is it possible to enter into administration as a solvent company?

Answer 411

Yes.

Question 412

In company insolvency, what is a moratorium?

Answer 412

It is issued so that creditors may not start proceedings.

Question 413

In who'se interest do the administrators act?

Answer 413

The creditors - all of them.

Question 414

What is the aim of administration?

Answer 414

To rescue the company as a going concern, and if not achieve a better result than liquidisation.

Question 415

In which ways can a company enter into administration? (3)

Answer 415

Application made by the company Application made by company directors Application from the holder of a floating change.

Question 416

Can an administrator enter into proceedings on behalf of the company?

Answer 416

Yes

Question 417

Can administrators sell property, and remove / replace directors?

Answer 417

Yes.

Question 418

Ultimately what is the main act of the administrators in a company setting?

Answer 418

Place their recommendations to the creditors for approval.

Question 419

Who can propose a Company Voluntary arrangement where the company is already in liquidation or administration?

Answer 419

The liquidator or administrator.

Question 420

Which type of insolvency allows for a moratorium to be obtained

Answer 420

Administration CVAs can NOT have moratoriums unless it is classed as a small company.

Question 421

What is the difference between liquidation and other forms of insolvency?

Answer 421

Liquidation is final. Will look at previous transactions for potential clawback.

Question 422

What are the two types of liquidation?

Answer 422

Voluntary and compulsory.

Question 423

What are the two types of voluntary liquidation?

Answer 423

Members voluntary liquidation Creditors voluntary liquidation.

Question 424

When is a members voluntary liquidation used?

Answer 424

When members want to voluntarily close down the business. However, whilst directors can resign members can't, hence the need. Can't advertise shares for sale so this makes it tricky.

Question 425

What are the steps involved for a voluntary liquidation? (4)

Answer 425

Directors make statement that the company is solvent, and will have funds over the 12 months winding up period to proceed Liquidator takes over from directors Liquidator advertises in London Gazette and companies house. Once assets sold, any surplus distributed to members.

Question 426

What are the steps involved for a voluntary liquidation? (4) Directors ????????????????????, and will have funds over the 12 months winding up period to proceed Liquidator takes over from directors Liquidator advertises in London Gazette and companies house. Once assets sold, any surplus distributed to members.

Answer 426

make statement that the company is solvent

Question 427

What are the steps involved for a voluntary liquidation? (5) Directors make statement that the company is solvent, and will have funds over the 12 months winding up period to proceed ????????????? from directors Liquidator advertises in London Gazette and companies house. Once assets sold, any surplus distributed to members.

Answer 427

Liquidator takes over

Question 428

What are the steps involved for a voluntary liquidation? (5) Directors make statement that the company is solvent, and will have funds over the 12 months winding up period to proceed Liquidator takes over from directors Liquidator ???????????? and companies house. Once assets sold, any surplus distributed to members.

Answer 428

advertises in London Gazette

Question 429

What are the steps involved for a voluntary liquidation? (5) Directors make statement that the company is solvent, and will have funds over the 12 months winding up period to proceed Liquidator takes over from directors Liquidator advertises in London Gazette and companies house. Once assets sold, ?????????????

Answer 429

any surplus distributed to members.

Question 430

When is a creditor's voluntary liquidation likely to happen?

Answer 430

When the business is no longer viable and unable to pay creditors upon winding up.

Question 431

Who nominates the liquidator in a creditor's voluntary liquidation?

Answer 431

The members. However, the creditors can nominate their own if they disagree with the member's nominee.

Question 432

What are the differences between a member's voluntary liquidation and a creditors voluntary liquidation? (2)

Answer 432

Members voluntary liquidation is by choice, because they want to wind down the company. There will also not be enough money to pay all the creditors (otherwise a members voluntary liquidation would have been done), so the creditors are paid off in the statutory order.

Question 433

What is a compulsory liquidation?

Answer 433

One started by the creditors but taken to court. The court schedules a winding up hearing, and notice is given to the company.

Question 434

What is a defence against compulsory liquidation?

Answer 434

They the company can pay it's debts - need to provide evidence. However there is an automatic assumption of insolvency if there is an UNSATISFIED STATUTORY DEMAND or an UNSATISFIED JUDGMENT DEBT

Question 435

What is the statutory order of repayment of creditors? (5)

Answer 435

a. Expenses of winding up – liquidators, solicitors etc b. Preferential creditors – staff wages and holiday pay for last 4 months up to £800; HMRC c. Floating charges d. Unsecured creditors paid (if any money left) e. However, if more than £10,000 is left for floating charges then 50% of the first £10,000 (and 20% thereafter) is made available for the unsecured creditors. This is known as ring fencing.

Question 436

What is the statutory order of repayment of creditors? (5) a. Expenses ??????????????? b. Preferential creditors – staff wages and holiday pay for last 4 months up to £800; HMRC c. Floating charges d. Unsecured creditors paid (if any money left) e. However, if more than £10,000 is left for floating charges then 50% of the first £10,000 (and 20% thereafter) is made available for the unsecured creditors. This is known as ring fencing.

Answer 436

of winding up – liquidators, solicitors etc

Question 437

What is the statutory order of repayment of creditors? (5) a. Expenses of winding up – liquidators, solicitors etc b. ??????????????? – staff wages and holiday pay for last 4 months up to £800; HMRC c. Floating charges d. Unsecured creditors paid (if any money left) e. However, if more than £10,000 is left for floating charges then 50% of the first £10,000 (and 20% thereafter) is made available for the unsecured creditors. This is known as ring fencing.

Answer 437

Preferential creditors

Question 438

What is the statutory order of repayment of creditors? (5) a. Expenses of winding up – liquidators, solicitors etc b. Preferential creditors – staff wages and holiday pay for last 4 months up to £800; HMRC c. ??????????? charges d. Unsecured creditors paid (if any money left) e. However, if more than £10,000 is left for floating charges then 50% of the first £10,000 (and 20% thereafter) is made available for the unsecured creditors. This is known as ring fencing.

Answer 438

Floating

Question 439

What is the statutory order of repayment of creditors? (5) a. Expenses of winding up – liquidators, solicitors etc b. Preferential creditors – staff wages and holiday pay for last 4 months up to £800; HMRC c. Floating charges d. ?????????????? paid (if any money left) e. However, if more than £10,000 is left for floating charges then 50% of the first £10,000 (and 20% thereafter) is made available for the unsecured creditors. This is known as ring fencing.

Answer 439

Unsecured creditors

Question 440

What is the statutory order of repayment of creditors? (5) a. Expenses of winding up – liquidators, solicitors etc b. Preferential creditors – staff wages and holiday pay for last 4 months up to £800; HMRC c. Floating charges d. Unsecured creditors paid (if any money left) e. However, if more than ??????????? is left for floating charges then 50% of the first £10,000 (and 20% thereafter) is made available for the unsecured creditors. This is known as ring fencing.

Answer 440

£10,000

Question 441

What happens with regard to the statutory order of repayment of creditors if there is insufficient money?

Answer 441

Each class is fully paid until arriving at a class where there isn't enough, at which point the money is shared proportionately according to the amount owed.

Question 442

How are secured creditors repaid in the event of bankruptcy? (3)

Answer 442

Asset is sold. If there is any surplus it will go towards of other creditors If it is sold for less then the creditor becomes an unsecured creditor for the remainder owed.

Question 443

How are secured creditors repaid in the event of bankruptcy? (3) Asset is ??????? If there is any surplus it will go towards of other creditors If it is sold for less then the creditor becomes an unsecured creditor for the remainder owed.

Answer 443

sold.

Question 444

How are secured creditors repaid in the event of bankruptcy? (3) Asset is sold. If there is any surplus it will ???????????? If it is sold for less then the creditor becomes an unsecured creditor for the remainder owed.

Answer 444

go towards of other creditors

Question 445

How are secured creditors repaid in the event of bankruptcy? (3) Asset is sold. If there is any surplus it will go towards of other creditors If it is sold for less then ?????????????????

Answer 445

the creditor becomes an unsecured creditor for the remainder owed.

Question 446

Who can look for a clawback?

Answer 446

Liquidator, administrator or trustee in bankruptcy.

Question 447

What is a 'preference'?

Answer 447

Paying one creditor ahead of others (who would otherwise be further back in priority).

Question 448

What can be done when a liquidator, administrator or trustee in bankruptcy finds a transaction that involved a preference?

Answer 448

The transaction can be set aside.

Question 449

Does a transaction at a preference have to involve cash only?

Answer 449

No, it can for instance also apply with regard to the granting of a charge over an asset.

Question 450

There are two different durations for clawbacks for preferences, one is 6 months (from the date of insolvency), and one is 2 years (from the date of insolvency). Which applies to which circumstance?

Answer 450

They can look back two years for any connected person - close relative or partner They can look back 6 months for anybody else.

Question 451

For the purposes of clawbacks for preferences who is a connected person?

Answer 451

Close relative Partner Other directors / shadow directors / anybody else with control

Question 452

Clawbacks - Preferences What are the conditions that need to be made out in order for the clawback to be valid?

Answer 452

Must have been insolvent at the time of, or as a result of the transaction in question. Must be proved that there was a DESIRE to prefer the creditor. Note: If the transaction was with a connected person then there is a presumption of desire to prefer.

Question 453

Clawbacks - Preferences With whom does a presumption to desire apply?

Answer 453

Any connected person, including co-directors etc.

Question 454

Clawbacks - Preferences Would giving a supplier a charge over an item with a view to continue trading with that supplier, constitute a preference?

Answer 454

No, because it is in order to keep the business going.

Question 455

Clawbacks What are the three types of transactions considered for clawbacks?

Answer 455

Preference Transactions at an undervalue Wrongful or fraudulent trading.

Question 456

Clawbacks - Transactions at an undervalue Does this include gifts?

Answer 456

Yes

Question 457

Clawbacks - Transactions at an undervalue What is the timeframe that can be looked back at? Note: This is different from transactions at an undervalue.

Answer 457

Within two years, AND at a time the company was insolvent (or became insolvent as a result of the transaction). This is the same whether or not the person was connected. Compare this with clawback of preference, which has a different period for whether the transaction was with a connected person (2 years) or anybody else (6 months).

Question 458

Clawbacks - Transactions at an undervalue What defences are available?

Answer 458

Transaction was entered into in good faith For the purposes of carrying on business Had grounds to believe the transaction would benefit the company

Question 459

Clawbacks - Transactions at an undervalue Where there is a total bankruptcy, how many years back can be considered?

Answer 459

Up to 5 years. Compare this with the 2 years for if a company was merely insolvent.

Question 460

Clawbacks - Wrongful and Fraudulent trading What act would constitute fraudulent trading for the purposes of clawback?

Answer 460

Putting assets beyond reach, thus attempting to defraud creditors. This is a criminal offence.

Question 461

Clawbacks - Wrongful and Fraudulent trading What is the defence to wrongful trading?

Answer 461

That there was a genuine belief that things would get better, even if that belief is completely unrealistic. Therefore action is rarely taken as it is very difficult to prove intention.

Question 462

Clawbacks - Wrongful and Fraudulent trading What is the definition of wrongful trading?

Answer 462

Liquidator or administrator brings charge that a director knows or OUGHT to have known that the company was about to become insolvent and failed to act in the interests of the creditors.

Question 463

Clawbacks - Wrongful and Fraudulent trading Is a director personally liable in wrongful trading?

Answer 463

They can be, yes.

Question 464

Clawbacks - Wrongful and Fraudulent trading What is the test to determine whether a director will be personally liable for wrongful trading?

Answer 464

It is the *higher* of :- What a reasonably diligent person would do, and What THIS person should reasonably have done.

Question 465

Clawbacks - Wrongful and Fraudulent trading What measures could a director be expected to take to avoid wrongful trading? (5)

Answer 465

Taking and following professional advice Ceasing to buy on credit Chasing debts Regular minuted meetings Consider whether directors salaries are continued to be made

Question 466

Clawbacks - Wrongful and Fraudulent trading What measures could a director be expected to take to avoid wrongful trading? (5) Taking and following ??????????? Ceasing to buy on credit Chasing debts Regular minuted meetings Consider whether directors salaries are continued to be made

Answer 466

professional advice

Question 467

Clawbacks - Wrongful and Fraudulent trading What measures could a director be expected to take to avoid wrongful trading? (5) Taking and following professional advice Ceasing to ??????????? Chasing debts Regular minuted meetings Consider whether directors salaries are continued to be made

Answer 467

buy on credit

Question 468

Clawbacks - Wrongful and Fraudulent trading What measures could a director be expected to take to avoid wrongful trading? (5) Taking and following professional advice Ceasing to buy on credit Chasing ????????? Regular minuted meetings Consider whether directors salaries are continued to be made

Answer 468

debts

Question 469

Clawbacks - Wrongful and Fraudulent trading What measures could a director be expected to take to avoid wrongful trading? (5) Taking and following professional advice Ceasing to buy on credit Chasing debts Regular ????????????? Consider whether directors salaries are continued to be made

Answer 469

minuted meetings

Question 470

Clawbacks - Wrongful and Fraudulent trading What measures could a director be expected to take to avoid wrongful trading? (5) Taking and following professional advice Ceasing to buy on credit Chasing debts Regular minuted meetings Consider whether directors??????????????

Answer 470

salaries are continued to be made

Question 471

Clawbacks - Wrongful and Fraudulent trading What is the consequence of a floating charge being made for no consideration, in the final 12 months of trading, if it can be proven that the company was insolvent at the time?

Answer 471

It is automatically void.

Question 472

How is it possible to show that a company is unable to pay it's debts? (4)

Answer 472

Creditor owes more than £750, sends a statutory demand, not paid within 21 days Creditor has obtained judgement and attempted to execute, without success. Company unable to pay debts "we cannot afford to pay you until" (aka cash flow test) Value of assets are less than liabilities (balance sheet test) - director knows the stock isn't worth what the balance sheet says.

Question 473

How is it possible to show that a company is unable to pay it's debts? (4) Creditor owes more than??????, sends a statutory demand, not paid within ?????? days Creditor has obtained judgement and attempted to execute, without success. Company unable to pay debts "we cannot afford to pay you until" (aka cash flow test) Value of assets are less than liabilities (balance sheet test) - director knows the stock isn't worth what the balance sheet says.

Answer 473

£750; 21

Question 474

How is it possible to show that a company is unable to pay it's debts? (4) Creditor owes more than £750, sends a statutory demand, not paid within 21 days Creditor has ????????????? without success. Company unable to pay debts "we cannot afford to pay you until" (aka cash flow test) Value of assets are less than liabilities (balance sheet test) - director knows the stock isn't worth what the balance sheet says.

Answer 474

obtained judgement and attempted to execute,

Question 475

How is it possible to show that a company is unable to pay it's debts? (4) Creditor owes more than £750, sends a statutory demand, not paid within 21 days Creditor has obtained judgement and attempted to execute, without success. Company ???????????? "we cannot afford to pay you until" (aka cash flow test) Value of assets are less than liabilities (balance sheet test) - director knows the stock isn't worth what the balance sheet says.

Answer 475

unable to pay debts

Question 476

How is it possible to show that a company is unable to pay it's debts? (4) Creditor owes more than £750, sends a statutory demand, not paid within 21 days Creditor has obtained judgement and attempted to execute, without success. Company unable to pay debts "we cannot afford to pay you until" (aka cash flow test) Value of assets are ????????????????? - director knows the stock isn't worth what the balance sheet says.

Answer 476

less than liabilities (balance sheet test)

Question 477

By when must paper copies of self assessments be submitted (not electronic)?

Answer 477

31st October.

Question 478

How long must someone be in the UK during the tax year to be eligible to pay income tax?

Answer 478

183 days or more.