5. Management 1

Question 1

Is a co sec required

Answer 1

Not compulsory (s270(1))

Question 2

Role of co secretary

Answer 2

Deals with legal admin requirements
Is an officer (s1121)

Question 3

Common duties of co secretary

Answer 3

Write up BM/GM meeting minutes
Update internal registers
Send necessary returns to Registrar of Companies

Question 4

Co secretary restrictions

Answer 4

No authority to enter into trading contracts of the co’s behalf (e.g to borrow money)

Question 5

Removal of co secreatary

Answer 5

Directors have the power to remove secretary at any time

Dependent on contract terms
May include compensation for breach of contract/give rise to statutory employment law claims

Question 6

Form to file upon resignation of co secreatary

Answer 6

TM02 s276(1)

Question 7

How many directors must a co have s154

Answer 7

Every private co to have at least one (s154(1)
Public co’s must have 2 directors (s154(2))

Question 8

Executive

Answer 8

An employee of the co
Has a service contract with it (written/verbal)

Question 9

Chief executive

Answer 9

Board of directors can delegate individuals to run the co

Board fixes service contract including remuneration

Question 10

NEDS

Answer 10

Does not participate in day-day business
Attend and votes at board meetings

Question 11

liability of NEDS

Answer 11

Relevant to public cos to act as judges and help prevent poor decision making

Provisions of CA 2006 relating to directors apply to executives and NEDS

Can still be liable to co (Equitable life v Bowley)

Question 12

How are chairs appointment

Answer 12

Directors have powers in the articles to appoint themselves as chair (art 12 MA)

Question 13

Chair role

Answer 13

Leads director’s board meetings & shareholder’s GM
Appointed by passing BR
May be removed from the board at any time

Question 14

What is a shadow director

Answer 14

Gives directions/instructions to directors and those directors act in accordance with them (s251(1))

Not formally appointed as director but influences their decision

May be used to obviate onerous duties imposed on directors

Question 15

Ultraframe v Fielding

Answer 15

Shadow director only when directors act on instructions given

Person advising in a professional capacity does not become liable as shadow director (s251(2)

Question 16

Defacto director

Answer 16

Person never appointed but performs the functions of a director
Person appointed under defect stays on after expiry of term
Falls within definition of director under s250(1) CA 2006

Question 17

What is an alternate director

Answer 17

One attending board meeting in place of a director (stand-in)
Governed by articles of the co
MA do not provide for appointment of alternate directors (special article to be added)

Question 18

how old must directors be s157

Answer 18

16

Question 19

restriction on someone being a director

Answer 19

Undischarged bankrupt cannot act as director

Question 20

How can directors be removed

Answer 20

Special notice of the resolution must be given by proposing shareholder (s168(2))

Question 21

form for becoming director post incorporation

Answer 21

After incorporation AP01 (individual) AP02 (corporate)

Question 22

MA 3

Answer 22

Directors are responsible for managing the co and can exercise all the co’s powers

Question 23

MA 5

Answer 23

Allows directors to delegate
To such person/committee
By such means
To such an extent
In relation to such matters
On such terms

Question 24

Which 2 types of authority can directors exercise

Answer 24

Actual and apparent authority

Question 25

What happens if director exceeds authority

Answer 25

Personally liable for breach of warranty of authority to 3rd party with whom they are dealing

Question 26

Actual authority

Answer 26

principal gives agent specific consent to agent’s actions Can be express/implied

Question 27

Apparent authority

Answer 27

agent acts without principals consent but still binds the principal in the contract with the third party

Question 28

What is a directors employment contract called

Answer 28

Service contract

Question 29

What if there are only 2 directors & one of them is to be granted the sc

Answer 29

Change articles via SR at GM allowing directors to vote

Question 30

Guaranteed term

Answer 30

Director contractually guaranteed to be employed for specified period of time

Question 31

What is required for guaranteed SC of longer than 2 years

Answer 31

it must obtain prior consent of shareholders by OR at GM (s188)

Question 32

If shareholder approval is not obtained for a SC

Answer 32

SC still effective, save guaranteed term clause Contract terminable on reasonable notice

Question 33

Definition of service contract s227(1)

Answer 33

A contact under which the director undertakes to perform services personally for the co. s227(2) this may be within/outside the scope of the ordinary duties of a director

Question 34

Where must a SC be kept

Answer 34

All SC must be kept at registered office or single alternative inspection location s228 Must be kept for inspection for one year after contract expiry (s229(2))

Question 35

If directors are uncooperative with s168 notice

Answer 35

Shareholder can force directors to call GM and consider the resolution s303, so long as they have 5% of shares and serve the notice via prescribed form s304(1)(a) directors have 21 days from receipt of this notice to call GM (must not be held more than 28 days after date on which meeting was called) SH can call meeting themselves (not more than 3 months after date on which directors became required to call the meeting)

Question 36

What is to be sent to director

Answer 36

Notice to director must be send immediately (s169(1))

Question 37

bushell v faith clause

Answer 37

Special article giving director-shareholders weighted voting rights on a resolution for their removal Check whether it is possible to remove the clause at GM Check compensation amount for breach of contract (may be expensive)

Question 38

methods of a director from dismissal

Answer 38

Bushell v Faith clause Give directors weighted voting rights Fixed term service contract of long duration without break clause Paying significant compensation may deter dismissal Shareholder agreement Under which the parties could agree not to vote against specified directors Director loan Outstanding loan, repayable if director loses their position

Question 39

Grounds for disqualification of a director by court

Answer 39

Conviction of indictable offence Persistent breaches of co legislation Fraud in winding up On summary conviction for filing or notice default Being an unfit director of insolvent cos Disqualification after investigation Fraudulent or wrongful trading Breach of competition law

Question 40

Effect of disqualification

Answer 40

Director may not Be a director Be concerned in any way in the promotion, formation or management of a co

Question 41

Contravention of director disqualification

Answer 41

Contravention is a criminal offence and punishable by up to 2 years imprisonment (s13 CDDA)

Question 42

Disqualification under the articles MA 18

Answer 42

Bankrupt Mentally ill Doctors written opinion is given that they are physically/mentally incapable of acting as a director

Question 43

Auditors

Answer 43

Are officers of co (s487(1)) Role is limited to co finances Auditor reviews co accounts independently yearly (s485)

Question 44

auditors duty in relation to accounts

Answer 44

Must state whether accounts have been prepared properly and give true and fair view of co (s495(3))

Question 45

if auditors fail to spot fraud against co

Answer 45

Can be sued if they fail to spot fraud against co Moore Stephens v Rolls Co itself had been used to defraud several banks

Question 46

auditor Removal from office and resignation

Answer 46

Auditor may be removed at any time by SH s510 OR is required, of which special notice given by proposing shareholder to Co WR cannot be used Auditor can resign by notice in writing sent to reg office s516 Auditor ceasing to hold office must deliver statement to co of the circumstances in connection with the cessation Statement must be filed with Reigstrar ++