The consequences of incorporation Flashcards
In what circumstances is the veil lifted by the courts (4)
Group - where the subsiduary is seen as an agent to the parent company
To reveal national identity - In a time of war it is illegal to trade with an enemy country
Sham companies - Companies formed to evade a legal obligation
Quasi-partnership - when a company is in nature a partnership. So on winding up of the company this is a complete breakdown of the company as it would if it was a partnership
In what circumstances is the veil lifted by in statute (3)
Director is disqualified so therefore become jointly or serverally liable for debt
Fraudulent and wrongful trading - carrying on business
Public company trading without a Trading certificate - personal liability for directors
Explain with context to the following
Limited by shares
Limited by guarantee
Unlimited
Limited by shares - shareholder liability is limited to the amount of share capital unpaid PRIVATE & PUBLIC
Limited by guarantee - limited by an agreed amount that the memebers will contribute to assets, usually for charities or non commercial organisation PRIVATE
Unlimited - no limit, do not need to file accounts unless it is a subsiduary PRIVATE
Explain with context to the following Public vs Private
Liability;
Liability Share capital ability to commence trading Public offers Name Loans Directors Company secretary Written resolutions AGM's Accounts and reports Payment for shares Reduction of capital Power to redeem or purchase shares out of capital Pre-exmeption (rights issue)
Public Private
Liability - limited unlimited or limited
Share capital- min 50,000 no min
Commence trading trading cert on incorporation
Public offers yes no
Name plc ltd or limited
Loans (approved) Directors Directors only
Connected persons
Directors Min 2 Min 1
Company sec yes no
Written resolution n/a can do written resolution
not a meeting
AGM Annual x
Accounts NOT SIZE file 6 mo file 9 m
at AGM
Payment of shares 1/4 paid up x
Reduction in cap special reso special reso and
and courts written statement
from director
Power to redeem x may be allowed
subject
Pre ex right included can be excluded
Does a company have to supply it articles of association to CH
No in this case the model article of association will be assumed
What is a companys constitution and who does it bind
Company constitution is the companies articles and all relevant resolutions. They bind;
Company to memeber
Members to company
Members to one another
Only when can the articles be enforced
When the member is protecting their rights as a memeber not in any other capacity e.g solcitor to company
How can articles be altered in context to the following
resolution
Update registra
Memeber prior to alteration
Special resolution
Sent to registar within 15 days
Existing memeber will not be bound by alteration which require them to take more shares or increase their liability.
What are the following resolutions
Special resolution
Normal resolution
special 75% or more
Normal 51% or more
Explain provisions for entrenchment
Certain aticles may have ‘provision for entrenchment’ this mean certain condition need to be met for amendments to that article (not just special resolution)
However you can’t say that article can never be changed
and you can’t say that entrenchment can never be changed
Explain the following
Accounting records Annual accounts Directors report Direcctors remuneration report Auditors report Strategic report
Private 3 year, public 6 years Dailty transaction/ assets and liabilities/ end of year stock Balance sheet and P&L All Quoted companies only all auditied large & medium size businesses
What must be included in the memorandum of association
Statement saying the members wish to form a company
What to watch out for when Q asks
company limited by guarntee
Company does not have share capital
Explain the main difference between
Memorandum of association
Articles of association
Essential requirement for registration
If not submitted model articles assumed
