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U3 Flashcards

1
Q

Ordinary resolution

A

MORE THAN 50% of votes in favour

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2
Q

special resolution

A

AT LEAST 75% of votes in favour

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3
Q

Amending articles

A

Special resolution

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4
Q

changing company name

A

special resolution

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5
Q

changing from private to public

A

special resolution

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6
Q

Who can appoint a director (MA17)?

A

Either by the directors OR shareholder by ordinary resolution

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7
Q

Removing a director

A

ordinary resolution

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8
Q

Which companies can use the written resolution procedure?

A

Only private companies

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9
Q

Can a written resolution be used to appoint a director?

A

Yes, by ordinary resolution

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10
Q

Can a written resolution be used to remove a director?

A

No, only at a GM by ordinary resolution

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11
Q

Can a written resolution be used to amend the articles?

A

Yes, by special resolution

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12
Q

Who must the written resolution be sent to?

A

All eligible members (those entitled to vote on the resolution on the circulation date of the resolution) AND auditors

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13
Q

What should a written resolution include when circulated?

A
  • How to sign the agreement AND
  • Deadline for returning written resolution (lapse date)
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14
Q

What is required for written resolution to pass?

A

Requires the requisite percentage of eligible members to vote in favour before the lapse date expires (28 days) usually midnight

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15
Q

When does a written resolution become effective?

A

As soon as the required majority signify their consent

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16
Q

When is the lapse date for a written resolution?

A

28 days after the circulation date and timer begins on the circulation date

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17
Q

What is the difference between a shareholder and eligible member?

A

In some circumstances, a shareholder is not eligible to vote

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18
Q

How can shareholders requisition a GM?

A

Shareholders with at least 5% paid up capital (and can vote at GM)

Directors must call within 21 days of request

Minimum notice is 14 clear days (max 28 days)

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19
Q

How can shareholders request to circulate a written reoslution?

A

Shareholders with 5% or more of voting rights

Directors must circulate with statement (if any up to 1000 words) within 21 days of request

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20
Q

Who is notice of a GM sent to?

A

all shareholders, director, auditors

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21
Q

What must the notice set out?

A
  • Time, date, place
  • General business of meeting
  • Exact wording of any special resolution
  • Shareholders right to appoint a proxy
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22
Q

What is the notice period for a GM?

A

14 clear days (+48hrs for email and post)

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23
Q

How can a GM be held on short notice?

A

Consent from:
* majority in number of shareholders AND
* holding at least 90% of voting shares (95% for public companies)

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24
Q

Which shareholder decisions cannot be held on short notice?

A

Any that require a memorandum:

  • Removing a director
  • Loan to director
  • Service contract (fixed term > 2 years)
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25
Q

when will a GM be quorate

A

at least 2 shareholders unless only one member

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26
Q

can shareholders vote and count in quorum where they have a personal interest

A

Generally - yes

EXCEPT -
* resolution to buyback their shares
* ordinary resolution to ratify directors breach where the director is a shareholder

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27
Q

Who can demand a poll vote?

A
  • Chair
  • Directors
  • 2 or more persons with right to vote on resolution
  • Person/persons holsing 10% or more of the total voting rights of all the shareholders having the right to vote on the resolution
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28
Q

When can a poll vote be demanded

A
  • before or during GM
  • before or after show of hands votes

POLL VOTES OVERRIDES SHOW OF HANDS

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29
Q

How long must minutes of GM be kept?

A

Minutes must be kept at the registered office for 10 years

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30
Q

What is the time limit for sending copies of special resolutions to Companies House?

A

Copies of special resolutions must be sent to Companies House within 15 days (s 29 & 30 CA).

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31
Q

Where can a company keep its registers, such as the register of members?

A

Registers can be kept at the registered office, a Single Alternative Inspection Location (SAIL), or the company may elect to keep them at Companies House.

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32
Q

What is the consequence of failing to maintain the necessary registers, such as the PSC register?

A

criminal offence.

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33
Q

What is an eligible member?

A

shareholders entitled to vote on the resolution as at the circulation date of the resolution

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34
Q

What powers does the ECCTA 2023 give to the Registrar?

A

Registrar can query, reject, or request additional evidence for filings and remove material more quickly than before.

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35
Q

What is the consequence of providing misleading, false, or deceptive information to Companies House?

A

It is a criminal offence. Under the ECCTA 2023, the offence also includes providing false information without a reasonable excuse.

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36
Q

What are the statutory books?

A
  • Register of Members.
  • Register of Directors.
  • Register of Directors’ Residential Addresses.
  • Register of Company Secretaries.
  • Register of People with significant control (PSC)
  • Register of Charges
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37
Q

Where can statutory books be kept?

A
  • The company’s registered address,
  • A Single Alternative Inspection Location (SAIL), or
  • On the central register at Companies House.
38
Q

What forms are used to notify or move records to or from the SAIL?

A
  • AD02 - notify CH of a SAIL address.
  • AD03 - moving records to the SAIL.
  • AD04 - moving records back to the registered office.
39
Q

For how long must a company keep records, including minutes of board meetings and general meetings and record of written resolutions?

A

10 years

40
Q

What happens if a company fails to keep adequate accounting records?

A

offence under s 387 CA 2006.

41
Q

what must directors ensure each year

A

that accounts are produced each financial year giving a true and fair view of the company

42
Q

What are the exceptions to the requirement for directors to prepare a directors’ report accompanying annual accounts?

A

Exceptions include:

  • Small companies (balance sheet £5.1m or less, turnover £10.2m or less, and 50 employees or less in a financial year (s 382)).
  • Micro-entities (balance sheet £316,000 or less, turnover £632,000 or less, and ten employees or less (s 384A)).
43
Q

Who should directors circulate accounts, directors report and auditors report to each year?

A

every shareholder and anyone else entitled to notice of GMs

44
Q

What are the time limits for filing accounts and the directors’ report at Companies House?

A
  • 9 months - after the end of the accounting reference period for private companies.
  • 6 months - for public companies.
  • Option of 3 months for newly incorporated companies.
45
Q

what is the confirmation statement

A

confirms info held at CH is correct and up to date

46
Q

What is the deadline for filing a confirmation statement (CS01), and what are the consequences of late or failed filing?

A

must be filed within 14 days of the confirmation date (the anniversary of incorporation). Late or failed filing is a criminal offence.

47
Q

Is a company secretary required for private companies?

A

No just public

48
Q

How is a company secretary appointed?

A
  • Usually named in IN01 on incorporation
  • Appointment after is by board resolution
49
Q

How can secretaries be removed?

A
  • resign
  • be removed by BR
50
Q

apparent authority and secretaries

A

may have apparent authority to enter contracts of administrative nature NOT trading contracts

51
Q

What are the requirements for notifying Companies House about changes in the company secretary’s particulars?

A
  • AP03/AP04 for the appointment of a company secretary within 14 days.
  • TM02 for the resignation/removal of a company secretary.
  • CH03/CH04 to notify Companies House of any changes in the particulars of the company secretary within 14 days.
52
Q

What is the register of secretaries?

A

it is what is is….
has specified particulars

53
Q

What is a company auditor

A

accountant who prepares report on annual accounts for shareholders

54
Q

Who qualifies as an auditor for a company?

A

An auditor must be a certified or chartered accountant, independent of the company, and not connected to anyone involved in the company (ss 1215-1215 CA 2006).

55
Q

Which companies must have an auditor?

A

private companies unless small companies who are exempt or dormant companie

56
Q

What does the auditor do?

A

prepares report on annual accounts for shareholders to ensure SHs not defrauded/misled

57
Q

How can an auditor be appointed and removed?

A

first auditor normally appointed by directors

58
Q

Do shareholders have power to appoint auditors

A

yes by OR

59
Q

Can auditors be removed?

A

Yes by SH at any time (by OR)

SH must give special notice to the company of the proposal to remove

60
Q

Can an auditor resign?

A

at any time by written notice to company’s registered office

must make a statement explaining circumstances

61
Q

What statement must the auditor make when removed or resigns

A

statement to company explaining circs connected with ceasing to hold office

62
Q

What are the criminal offences for an auditor under the Companies Act 2006 (s 507)?

A

An auditor can commit two criminal offences:

  • Knowingly or recklessly including misleading, false, or deceptive material in the auditor’s report.
  • Omitting statements from the report as required under the Companies Act 2006.
63
Q

what is a subscriber

A

the 2 people who sign memorandum and automatically become first sharehodlers

64
Q

who is a PSC

A

MORE THAN 25% of shares or voting rights

65
Q

What forms are used for changes to the PSC register, and what are they used for?

A
  • PSC01: For adding a new individual PSC.
  • PSC02: For adding a new relevant legal entity.
  • PSC04: For changes to individual PSC details already on the register.
  • PSC05: For changes to relevant legal entity details.
  • PSC07: For those ceasing to be a PSC.
66
Q

What is the deadline for filing changes to the PSC register?

A

14 days

67
Q

who is a member

A
  1. person who agrees to be a member AND
  2. their name is registered on the register of members
68
Q

What is the time limit for registering a member who has acquired shares by transfer or allotment?

A

The person must be registered as a member as soon as practicable and at least within two months of the transfer or allotment, according to s 771 & 554 CA 2006.

69
Q

What must be included in the register of members if the company has only one member?

A

The register must state that the company has only one member as per s 123 CA 2006. If the number of members increases, a statement must indicate when the company ceased to have just one member.

70
Q

What details must be recorded in the register if shares are held jointly by two or more people?

A

The register must record all names but only one address, according to s 113(5) CA 2006.

71
Q

when must register be available for inspection by shareholders

A

free for shareholders and fee for others

criminal offence to refuse inspection

72
Q

what happens if there is an incomplete or incorrect register

A

criminal offence

73
Q

when must share certificates be issues after allotment or transfer

A

within 2 months of share allotment or transfer

74
Q

what do the articles create between shareholders and company?

A

statutory contract between shareholders and company and among shareholders

75
Q

what is a shareholder agreement

A

agreement between shareholders NOT the company

NOT part of constitution

76
Q

What is a Bushell v Faith clause

A

weighted voting rights gives more votes when the resolution is about whether to remove that shareholder as a director

77
Q

what is a shareholder agreement not allowed to do?

A

restrict shareholders from voting a particular way in board meetings if they are a director

78
Q

what is an unfair prejudice petition?

A

Shareholders can petition the court if the company’s actions are unfairly prejudicial.

e.g harm to one or more shareholders that is unfair e.g. diverting opportunities, excessive director pay

79
Q

how will the courts determine an unfair prejudice petition

A

using an OBJECTIVE test - would a hypothetical bystander believe the act/omission was unfair

80
Q

what remedies could the court award for unfair prejudice petitions

A

other shareholders to buy out the prejudiced shareholder or for company to repurchase shares

81
Q

what is a derirative claim

A

Shareholders can bring claims on behalf of the company for wrongs done by directors, like negligence or breach of duty (breach of trust)

82
Q

what is the process for derirative actions?

A
  • shareholder applies to court and weed out baseless claims
  • at full hearing stage - court considers
83
Q

what is the notice period for BM?

A

reasonable notice

84
Q

how can directors pass a resolution w/o a board meeting

A

By unanimous consence (in writing)

85
Q

Who is a PSC

A

Shareholder with MORE THAN 25% of votinf rights or

have the right to appoint or remove a majority of the board or

have the right to exercise signficant influence or control over the company

86
Q

when does a change in articles become effective?

A

Articles change when the company adopts them by SR. The SR and the new articles must be filed at Companies House within 15 days.

87
Q

What can shareholders do if a company attempts to enter a contract that violates its constitution before the contract is binding?

A

They can seek an injunction to prevent the contract from being finalized.

88
Q

What is the significance of Section 39 CA 2006 in terms of contracts with third parties?

A

It abolishes the ultra vires doctrine with regard to third parties, meaning the contract is likely valid if entered into, even if it exceeds company powers in the constitution.

89
Q

When can shareholders not challenge a contract based on it exceeding the company’s powers?

A

Once the contract has been legally entered into

90
Q

What can directors be liable for if they authorize a contract that breaches the company’s internal restrictions?

A

Breach of duty to act in accordance with the company’s constitution under Section 171(a) CA 2006.

Business (6 decks)

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