WS1: Stakeholders in a company

Question 1

Who are the key stakeholders in a company?

Answer 1

Shareholders / Members
Directors / the Board
PSC - shareholders holding over 25% of shares

Question 2

When does a member become a member?

Answer 2

When their name is entered in the company’s register of members.

Question 3

What are the first shareholders of a company called?

Answer 3

Subscribers

Question 4

Common definition of a share

Answer 4

Bundle of rights

Question 5

What is the nominal / par value of a share?

Answer 5

Minimum subscription price for that share - often 1p / 5p / £1 - represents a unit of ownership as opposed to the actual value of the share.

Question 6

What is the excess over nominal value referred to as?

Answer 6

The ‘premium’

Question 7

What is the ‘issued share capital’?

Answer 7

Total amount in value, nominal and premium, of all shares in issue at any time.

Question 8

What is the paid-up share capital?

Answer 8

Amount paid on shares thus far on share capital

Question 9

When is a payment called?

Answer 9

When it has been demanded on a share

Question 10

When is a share allotted?

Answer 10

When a person acquires the unconditional right to be included in the company’s register of members.

Question 11

What is the difference between allotment and issue?

Answer 11

Issue is taken to mean [no statutory definition] once the shareholder has actually been registered as such in the company’s register of members.

Question 12

Who qualify as Persons with Significant Control?

Answer 12

Any individual who:
Owns more than 25% of shares or voting rights in the company

Has the power to appoint, or remove, a majority of its board of directors

Or otherwise exercises ‘significant influence or control’ over the company

Question 13

How many directors must a private company have?

Answer 13

One

Question 14

How many directors must a public company have?

Answer 14

Two

Question 15

What is minimum age for all directors?

Answer 15

16

Question 16

How are directors appointed?

Answer 16

Ordinary resolution of shareholders

Decision of directors [more common]

Question 17

Who decides the terms of a director’s service contract?

Answer 17

The board. Generally, only requires approval of a resolution of board. Long-term contracts might need shareholder approval however.

Question 18

What defines a ‘long-term service contract’?

Answer 18

When a service contract gives a director a guaranteed term of two years or longer including if there is an option to renew for further two years at their discretion.

Question 19

What happens to a long-term service contract if shareholder approval is not given?

Answer 19

The term in the service contract is considered void and the contract is implied to contain a term entitling the company to terminate the contract at any time via reasonable notice.