BLP Extra Flashcards
What do you need to set up a company from scratch?
- Copy of company’s memorandum
- Articles (if not going to be MA)
- Form IN01:
-company’s proposed name and registered office
-private or public
-statement of capital and initial shareholdings
-statement of company’s proposed officer and PSCs
-statement of compliance
4.Fee
Will be sent a certificate of incorporation
Partnerships
Contractual liability?
Tortious?
Debts?
Debts before they joined? Debts after they leave?
Jointly liable
Joint and several
Jointly
Won’t be liable in relation to debts incurred before they joined
Still be liable for debts after they retire, in respect of debts incurred whilst they were a partner (to relieve partner - partnership may novate agreement with consent of creditor)
What is best practice to state in board minutes in regard to decisions?
State that board has considered their duty to promote the success of the company (s 172)
What must be done if a company attempts to vary class rights?
What can shareholders do if response?
Consent in writing of holders of at least 75% of issued share capital or pass SR
Shareholders holding 15% of relevant shares can apply to court within 21 days to have variation cancelled
What is the statutory order of priority?
Priority?
Liquidator must distribute assets in accordance with priority
- liquidator’s costs of realising assets subject to fixed charge
- Fixed charge creditors
- Liquidator’s fees and expenses
- Preferential creditors
(1) Employees claims for unpaid remuneration due in four months before date of winding up - up to £800 plus accrued holiday pay
(2) HMRC - e.g. VAT - Set aside prescribed part fund
- Floating charge creditors
- Unsecured subject to prescribed part
- Interest owed to unsecured creditors
- Shareholders
Give advantages and disadvantages of an IVA
Adv:
-alternative to bankruptcy + avoid stigma and restrictions of bankruptcy
-binds all unsecured creditor
-moratorium available if interim order made
Disadv:
-May last longer than bankruptcy
-Cannot bind secured or preferential creditors without that creditor’s consent
-Expensive and time consuming process
How is a partnership taxed?
CGT?
Tax transparent - each partner liable for their own share of income or gains from partnership
However
A partnership must: make a single tax return of its profits (even though it does not pay tax itself), and
Partners also submit their own individual tax returns containing all income received from the partnership as well as other income receipts
CGT:
Each partner is treated as owning a fractional share of the asset. On disposal by the partnership, each partner is treated as making a disposal of their share and will be taxed on this share of any gain, subject to the availability of any reliefs available to individuals. (based on PSR or equally, if no PSR).
What about LLPs and taxation?
Treated the same as a partnership
When is financial assistance relevant?
What is considered financial assistance?
Who is prohibited from giving financial assistance?
Proposed acquisition of shares
Financial assistance given by:
-gift
-guarantee, security, indemnity
-loan
-anything else where net assets of company are reduced to a material extent of giving assistance
If target company is public:
-target company itself and
-any subsidiary of target company (where private or public)
If target company private
-any public subsidiary of target co
What are the exceptions to financial assistance?
Specific transactions are exempt e.g.
-money lending in ordinary course of business
-assistance in respect of employee share scheme
co. giving assistance must be
-private, or
-public (and net assets are not reduced by giving of assistance)
Consequences of unlawful financial assistance?
The transaction amounting to prohibited financial assistance (eg the loan made the buyer) would be void and the wider transaction (eg the share acquisition itself) may be void as well.
Fine for company
Fine/imprisonment for directors
Consequences of failing to approve long-term service contract by OR?
Provision will be void
Deemed to contain a term entitling the company to terminate at any time on giving reasonable notice
