Stakeholders in a Company Flashcards
Who are the owners of a company?
A) Directors
B) Shareholders
C) Persons with Significant Control
D) Company Secretary
B) Shareholders
(Shareholders own shares in the company and have rights under the Articles.)
What percentage of shares or voting rights must a person hold to be a PSC (Person with Significant Control)?
A) More than 10%
B) More than 25%
C) More than 50%
D) More than 75%
B) More than 25%
(PSC = Over 25% shares or voting rights OR power to appoint/remove directors.)
What is the minimum number of directors required for a private limited company (Ltd) under CA 2006?
A) 1
B) 2
C) 3
D) 4
A) 1 (s154 CA 2006 – A private company must have at least one director.)
Which of the following is NOT a type of director?
A) Executive Director
B) Non-Executive Director
C) Shadow Director
D) Shareholder Director
D) Shareholder Director
(No such term; shareholders can be directors but hold different roles.)
A company’s liability is limited by?
A) The total nominal value of its issued shares
B) The personal liability of shareholders
C) The company directors
D) The government
A) The total nominal value of its issued shares
(Shareholders’ liability is limited to the unpaid value of their shares.)
John owns 40% of the shares in XYZ Ltd. He is not a director but is actively involved in making strategic decisions. How should he be classified?
A) Executive Director
B) Non-Executive Director
C) Person with Significant Control (PSC)
D) Alternate Director
C) Person with Significant Control (PSC)
(Owning more than 25% of shares = PSC, even if not a director.)
ABC Ltd is looking to appoint a new director. What is the easiest way to do this under Model Articles?
A) Pass an ordinary resolution of shareholders
B) Pass a special resolution of shareholders
C) Decision of the board of directors
D) Register the new director at Companies House before appointing them
C) Decision of the board of directors
(Art 17 Model Articles: Directors can appoint new directors unless Articles state otherwise.)
XYZ Ltd issues 500 new shares, but the new shareholders have not yet been entered into the register of members. What is their status?
A) They are shareholders.
B) They are PSCs.
C) They have only been allotted, not issued shares.
D) Their shares are invalid.
C) They have only been allotted, not issued shares.
(s558 CA 2006 – Shares are allotted when assigned but issued only when entered into the register of members.)
DEF Ltd’s Articles require 3 directors. The company currently only has 1. What is the legal position?
A) The company must comply with CA 2006, so 1 director is enough.
B) The company must appoint two more directors to comply with its Articles.
C) The single director can ignore the Articles and continue running the company.
D) Companies House will dissolve the company if no extra directors are appointed.
B) The company must appoint two more directors to comply with its Articles.
(Companies must follow their Articles even if CA 2006 requires only 1 director.)
A private company wants to remove a director. What is the correct process?
A) Pass an ordinary resolution of shareholders.
B) Pass a special resolution of shareholders.
C) Shareholders must follow s168 CA 2006 and give the director a chance to speak.
D) The board of directors can vote to remove the director.
C) Shareholders must follow s168 CA 2006 and give the director a chance to speak.
(Directors can only be removed by shareholders via ordinary resolution with a right to be heard.)
A shareholder has a contractual right under the Articles to be appointed as a director. Can they enforce this right?
A) Yes, because the Articles are a contract.
B) No, because Articles only apply to members in their capacity as shareholders.
C) Yes, if they are also a PSC.
D) No, because director appointments require shareholder approval.
B) No, because Articles only apply to members in their capacity as shareholders.
(Eley v Positive Government Security Life Assurance Co [1876] – Articles only bind members as members, not for employment or directorships.)
A director has been given a service contract for 5 years. What legal requirement must be met?
A) Board approval is sufficient.
B) Shareholder approval is needed if the contract exceeds 2 years.
C) The company must register the contract with Companies House.
D) The contract is invalid unless signed by the company secretary.
B) Shareholder approval is needed if the contract exceeds 2 years.
(s188 CA 2006 – Contracts over 2 years require shareholder approval.)
