4. Director's Duties Flashcards
(129 cards)
1
Q
Example of notes required in annual accounts, w/ regard to D
A
Salary, bonus and compensation
2
Q
When is there no approval needed for loans
A
If wholly-owned sub
3
Q
What shareholder res must all companies get for loan/security/guarantee to Ds
A
OR
4
Q
Provision - Ds owe duties to company
A
170(1)
5
Q
How do Ms approve BoD in advance - provision
A
By OR or in AoA, 180(4)
6
Q
What is a ‘minor transaction’ as exception to needing approval for loan to D/CP (LOAN/QUASI-LOAN)
A
Up to £10k
7
Q
If authorising CoI, so no breach of 175, what does 175 state about Ds participation
A
Does not count for quorum or voting
8
Q
When is a derivative claim likely
A
If only minority are in favour of bringing an action, as majority could remove Ds
9
Q
1163
A
Defines NCA for 190
10
Q
What happens if no approval from Ms obtained for LTSC
A
Provision void to extent of contravention, and C deemed to contain term entitling termination at any time w/ reasonable notice
11
Q
275
A
Duty to keep reg of CS
12
Q
When is approval not needed from Ms for LTSC or SPTs
A
Not needed from Ms of wholly owned sub, but is needed from Ms of HC
13
Q
Which statutory duty is not enforceable as FD, limiting to damages
A
174
14
Q
Tax implications for recipient of loan from close company
A
Only deemed to receive dividend equal to loan if loan written off
15
Q
D w/ interest in 190 + voting at GM
A
D + CPs can vote, as MA 14 only applies to Ds
16
Q
Where is NCA defined for 190
A
1163
17
Q
Which statutory duty has a non-exhaustive list of factors to have regard to
A
Promote C success, 172
18
Q
What can Ms not ratify
A
Anything illegal
19
Q
What is the sanction for failing to get M approval for loan
A
Voidable (unless R impossible)
20
Q
196
A
Affirming SPT by OR
21
Q
What if approval of LTSC is by WR
A
Send copy of C to every M w/ WR
22
Q
two-stage test for if approval needed under 188
A
C continues w/o company decision + C unable to terminate, or only in specific circumstances
23
Q
What must transaction be if between £5k + £100k
A
Must be 10% of C’s NAV
24
Q
When are there tax implications on loans by close company
A
If given to participator, and not in ordinary course of business nor less than £15k to full-time employee w/ no material interest
25
What is failure to declare under 182
Criminal offence, not just BoD
26
What kinds of companies need approval for loans to CPs/QL/CT
PrivC associated w/ plc, or plc
27
What is the general rule on company indemnifying Ds
Void
28
What does loan mnemonic stand for (CTAESD)
Company, transaction, approval, exceptions and sanction and director's duties
29
What happens to liability for relevant parties if loan affirmed within reasonable period
Continues
30
What is D's general authority under MA 3 subject to
MA 4 M reserve power
31
When is PrivC associated w/ pub
If pub is sub of Priv, or Priv is sub of plc
32
Why is there little use in short notice for approval of LTSC
Copy of C must be available for inspection 15 days prior to GM
33
What can Ms do if loan given w/o M approval
Affirm within reasonable period
34
If loan to D or CP of D, what is effect on BM
MA 14(1) - excluded from voting and quorum
35
162
Duty to keep reg of Ds
36
MA 52(2) is relevant to what
Prohibiting company from indemnifying Ds against liability to C.
37
Section on declaring interest in transaction
177
38
Part of CA on PrivC associated with pub if sub of plc
256(a)
39
What are the tax implications for the close company on loan to participator
Pay CT within 9 months + 1 day from end of period
40
1147
Deems delivery of notice 48 hours later
41
Procedure if LTSC proceeding to GM approval
C must be available for inspection 15 days prior to GM
42
When does MA 14(1) not exclude D w/ interest under 177 from participating in voting + quorum for BM
Tailord AoA, disapplied OR, replaced by SR, interest unlikely to give rise to CoI, or from permitted cause in MA 14(4)
43
D w/ interest in 190 + voting at BM
MA 14(1) applies, so D excluded from quorum + voting
44
When must D declare interest in existing transaction
Immediately
45
What can Ms do if Ds refuse to bring Ps for D's BoD
Bring derivative claim
46
423
Copy of Annual Accounts to be sent to every M
47
When is CP not liable for gain/loss in unauthorised SPT
Unaware of contravention
48
What address must both D and CS file
Service
49
What is a credit transaction
Company provides goods/services w/ promise of future payment - no 3rd party
50
If D declares interest under 177, prior to BM, what happens at next BM
Deemed to form part of next BM
51
What could happen to D if duty breached
Terminate D's position or disqualify D
52
What must D state when declaring interest under 177
Nature + extent of interest
53
Two BRs required whenever Board are approving contract
BR1 to approve form, and BR2 to authorise signatory
54
Provisions for statutory duties of Ds
170 - 177
55
When is a property transaction automatically substantial
Over £100k
56
Where is 'connected person' defined in CA for 239
252
57
Which duties should be considered when making decisions at BMs
ALL
58
What is the best practice for if D has interest in transaction
To declare
59
When will close company get a refund of CT paid on loan to participator
If waived/repaid
60
Provision requiring LTSC to be kept open for inspection once approved
228
61
What is the liability of relevant parties for failing to get M approval for loan
Account for gain + indemnify for loss
62
How do you work out C's NAV for 190
Look at accounts or called up share capital
63
Model Article relevant on indemnifying Ds
52(2) prohibits indemnifying D against liability TO C
64
When is D not liable for gain and loss caused by unauthorised SPT
If took reasonable steps to ensure compliance, or unaware of contravention
65
D w/ interest under 177 + voting at GM
D can participate, as MA 14 only applies to Ds
66
What is a 'minor transaction' as exception to needing approval for loan to D/CP (CREDIT TRANSACTION)
Up to £15k or in ordinary course of business and normal terms
67
228
LTSC to be kept open for inspection once approved
68
413 requires what
Disclosure of credit advanced to Ds in accounts
69
mnemonic for loans to Ds
Can't Take An Elephant Sky Diving
70
Two-stage test in reasonable skill duty (174)
Objective (reasonably expected of D) + subjective (skill D actually has)
71
1159 defines what
Wholly-owned sub
72
What is a quasi-loan
Company agrees to pay 3rd D/CP's debt, and D/CP to reimburse
73
When does 175 not apply (other than transactions w/ C)
If unlikely to lead to CoI, or authorised
74
How long to notify CH of any changes to D + CS reg
14 days
75
If D/CP cannot vote in ratifying, what need they not be sent and in what case
If ratifying by WR, need not be sent WR
76
Two examples of 'connected person' under 252
Direct family + body corporate in which D + CPs own more than 20% share capital/voting rights
77
Part of CA on indemnifying Ds
232 - 240
78
239
Ms can ratify D's BoD by OR
79
What is a close company
Company under control of 5 or less participators, or all participators are Ds
80
How are D duties relevant for loans to Ds/CPs
Consider 177 declaration + 172
81
What are PMMs when LTSC approved
Copies of C must be kept (228) open to inspection w/o charge for Ms
82
Why do statutory duties exist
To ensure M confidence and curtail wide power given under MA 3
83
MA provision on D's general authority
MA 3
84
What must you have in mind if restructuring loan to avoid needing M approval
If still complying w/ D duties
85
How are statutory duties of Ds enforceable + provision
As FDs, 178
86
What happens if loan to D to defend Ps, and D unsuccessful
D must repay
87
What additional address must D file
Residential (kept private at CH)
88
When is approval required for D's service conract
If C longer than 2 years, looking at aggregate period
89
How do you show duties considered when making decisions at BM
Note in Board Minutes
90
When does 177 not apply
D unaware, unlikely to give rise to CoI, other D reasonably aware, or concerns terms of D's C
91
What info on Ds do CH require
Identity in reg of Ds, w/ service address, and various notes in annual accounts
92
Kind of res required for 190
OR
93
Section on LTSC
188
94
Provision for affirming SPT by OR
196
95
What if no approval given for SPT
Can affirm by OR within reasonable period, or transaction voidable
96
Where is CP defined for 190
252
97
How many statutory duties
7
98
Provision on interest in existing transaction
182
99
Where must QTPIP/QPSIP if given be disclosed
In D report + kept at reg office
100
When do additional restrictions apply for loan/security/guarantee?
If PubC/PrivC associated w/ pub
101
Duty to keep reg of CS provision
275
102
When are Ds liable for gain or loss caused by unauthorised SPT
Regardless of affirming
103
When is notice of interest under 177 deemed delivered + provision
48 hours later (1147)
104
When does 175 not appl
For transactions w/ C
105
Four normal remedies for breach of statutory duty
set aside, injunction, restore property and/or damages
106
Duty to keep reg of Ds provision
162
107
When is D/CP not liable for not getting M approval for loan
If D took reasonable steps, or D/CP unaware of contravention
108
Where is derivative claim in CA
260
109
Section on SPT
190
110
If D commits BoD, what can Ms do AFTER the fact + provision
Ratify by OR (239)
111
Who do Ds owe duties to
Company
112
What four options are open to Cs to indemnify Ds
Insurance, QTPIP, QPSIP, and funding Ds Ps
113
When must D declare interest under 177
Before transaction
114
180(4)
Ms can approve BoD in advance by OR/AoA
115
When is there no need to declare interest in transaction under 177
If D unaware, unlikely to lead to CoI, other Ds reasonably aware, or concerns service C
116
Why is bringing a derivative claim difficult
Need court permission
117
Where is substantial defined for 190
191
118
3-stage test for 190
CP, NCA and substantial
119
Inspection of D and CS reg for Ms is..
Free
120
When is property transaction NOT substantial
Below £5k
121
What may need to be disclosed in accounts after loan to D
The credit advanced
122
Provision requiring copy of Annual Accounts to be sent to every M
423
123
Where is wholly-owned sub defined in CA
1159
124
D w/ interest under 177 + voting at BM
MA 14(1) excludes D from voting + quorum
125
How can D give notice to other Ds of interest under 177
Written under 184, general, or at BM
126
Who cannot vote if ratifying under 239
Ds and any connected person
127
Examples of when no approval required for loans to D/CP
For D to defend Ps, or given by money-lending company on normal terms, or for minor transaction
128
When is 175 likely to be triggered
For when D ting for competitor
129
Can D vote/count for quorum if ratifying under 239?
No vote, but can count for quorum
