U3 + U4 Company Secretary and Company Members

Question 1

What is the company secretarty 3 main roles?

Answer 1

1. Keeping the various records of the company (such as statutory records)
2. Filing Documents at Companies House
3. The general adminstration of the company

Question 2

Must all companies have a company secretary?

Answer 2

Private Companies do not need.

Public Companies must have a company secretary

Question 3

Can a company be a company secretary?

Answer 3

Yes, a company can become a company secretary and fulfil its role through its officers

Question 4

How can a company secretary be removed?

Answer 4

The directors can remove a company secretary via a board resolution

Question 5

What formalities have to take place following the removal or appointment of a director?

Answer 5

1. Update Register of Secretaries (if not kept centrally)
2. File Relevent Form with Companies house

Appointment - AP03 (individuals) or AP04 (Coporate Bodies)

Termination - TM02

Question 6

If a company secretary is named on Part 2 of the IN01 form, when are they incoporated?

Answer 6

The first secretary will be automatically incorporated in Part 2 of the IN01 form

Question 7

What is the minimum amount of company members (Shareholders) a company must have?

Answer 7

There must be atleast 1

There is no maximum

Question 8

Can a company be a shareholder?

Answer 8

Yes

Question 9

What is the diffrence between first members and subsequent members?

Answer 9

First Members

First members are subscribers, those who have signed the company’s memorandum prior to incorporation and have agreed to become members of the company.

Subsequent Members

Subsequent members are those who acquire shares and who are registered as such in its register of members.

They may have new shares issued to them by the company, or they may have existing shares transferred to them (ie purchased or gifted)

Question 10

What are the 2 rules regarding registration of company membership (Shareholders)

Answer 10

1. A register of shareholders must be kept, unless an election is made to keep the records centerally
2. Shareholders may inspect the register, and it is a criminal offence to refuse them to do so

Question 11

What is meant by classes of shares?

What are the 2 most common?

Answer 11

Shareholders may be issued diffrent classess of shares, which have diffrent rights to ataching to them (relating to votes and dividends)

The company decides what rights attatch to the diffrent classess of shares.

ORDINARY SHARES - Usually gives the holders the right to vote and recieve dividends

PREFERANCE SHARES - Usually gives the holder prefered rights, such as the right to recieve dividends first

Question 12

What is a shareholder agreement?

Answer 12

Shareholder agreements may be entered into between the shareholders to govern their relationship in a private way (e.g agreements as to how voting rights will be exercised, to protect minority shareholders)

Question 13

What is the maximum a shareholder can be liable to?

Answer 13

Companies are a separate legal person.

In the absence of personal guarantees, the liability of a shareholder is limited to the extent of their investment in that company

Question 14

Where are members (shareholders) powers set out?

Answer 14

Members powers are set out by statute and in the companys articles.

Question 15

How are shareholders powers exersised?

Answer 15

There powers are exercised by passing resolutions in General Meetings or by written resolutions (in private companies)

Question 16

What 8 powers to shareholders have?

Answer 16

The right to:

1. Receive a share certificate
2. Receive notice of GM;s, Vote at Gms, or appoint a proxy
3. Receive a copy of the company’s annual account
4. Inspect minuets of the GMs, the company books, and director service contracts
5. Receive dividends where payable and declared
6. Request the court hold a gm
7. Bring winding up proceedings

8.Claim minority shareholder protection

Question 17

What is the diffrence between a minority and majority shareholder?

Answer 17

Majority Shareholders individually hold MORE THAN 50% of the companies voting shares

Minority Shareholders individually hold 50% or less of the companies voting shares

Question 18

What 3 remedies are avaliable to Minority Shareholders?

(MINORITY SHAREHOLDER PROTECTION)

Answer 18

1. Petition for Unfairly Prejudicial Conduct
2. Derivative Action
3. Winding up on the Just and Equitable ground

Question 19

What is derivative action?

Answer 19

Derivative action is taken by a shareholder for an action against a director for an act or omission (usually in breach of directors duties)

The company is the claimant, but the claim is brought on the behalf of the company by the share holder

Question 20

What is a petition for unfairly prejudical conduct?

Who is the claimaint?

What is the usual remedy?

Answer 20

A Shareholder may petition to the court for an order that the company’s affairs have been, or are proposed to be, conducted in a way that is both PREJUDICIAL AND UNFAIR TO THEM.

The shareholder is the claimant

The most popular order of the court is usually that the prejudiced shareholder is brought out.

Question 21

What is ‘Winding up on the just and equitable ground’?

Answer 21

It is a remedy sought by shareholders, allowing shareholders to apply to wind up the company on the basis that it is just and equitable to do so.

This could be because of a total breakdown of communication or a total deadlock / inability to make decisions.

Question 22

What conduct would meet the criteria for a shareholder to petition for unfailry prejudical conduct?

(3 things)

Answer 22

A wide range of conduct, such as:

1.Refusual to pay dividends when they are properly payable

2. Exclusion from management
3. Exessice pay being awarded to directors

Question 23

Who can demand a poll vote?

Answer 23

Any 2 voting members

or

Any members holding atleast 10% of the voting shares

Question 24

Which share holders can circulare a written resolution istead of needing a general meeting?

Answer 24

Shareholders with 5% or more voting rights

Question 25

What percentage shareholding must a member have to requisition a gm?

What is requisiting a GM ?

Answer 25

5%

Requisting a GM requires the directors to call a general meeting