7.2 Business Constitutional Documents and Filing Requirements Flashcards
(28 cards)
What is the memorandum of association?
Memorandum of association:
Simple document - statement of the company and its promoter(s) who are subscribing for shares at the time the company is formed.
Subscribers wish to form a company, agree to become members, with share capital at least one person must be willing to subscribe to the memorandum (CA s8)
What are the articles of association?
Articles of association: The company’s constitution - internal rules governing how the company will operate. A company may choose to use unamended Model Articles, amend the Model Articles or draft bespoke articles
Registration: A company must register its articles at Companies House, unless the company adopts the Model Articles in full and without amendment
What are some common amendments to the Model Articles?
Common amendments to the Model Articles:
- Limit a company’s objectives as they are unrestricted;
- Increase the quorum for board meetings to more than 2 directors;
- Remove the chairperson’s right to a casting vote;
- Allow directors to vote on issues in which they have an interest;
- Alter directors’ powers to allow for some shareholder control;
- Remove the requirement for a company to change its name by way of a special resolution (ss77(1)(b and 79)
- Alter the directors’ authority to allot and issue shares;
- Alter the statutory pre-emption rights of shareholders
What is the ECCTA Act 2023?
Economic Crime and Corporate Transparency Act 2023 (ECCTA):
Became law on 26 October 2023 - to improve transparency and more accurate and trusted information on the registers held at Companies House.
Longer term changes for the future will include compulsory identity verification for those setting up, owning, running or controlling a UK company and streamlining accounts filing options for small and micro-entity companies.
What other documents must be submitted to Companies house to form a private company limited by shares?
Other documentation and information that must be submitted to the Registrar at Companies House to form a private company limited by shares:
1) Articles of association (if not MAs);
2) Form IN01 and a fee;
3) Name of the company;
4) Statement of type of company and its intended business activity;
5) Confirmation of lawful purpose;
6) Details of appropriate registered office;
7) Details of appropriate registered email address;
8) Statement of persons having initial significant control;
9) Statement of proposed officers, that is, directors and secretary (if relevant) and their details;
10) Statement of capital and of initial shareholdings;
11) Statement of compliance, and
12) Election to keep information on a central register for private companies only
What is the importance of maintaining statutory registers?
Statutory registers
A company must maintain various statutory registers, including the following:
- register of its members,
- register of its directors,
- its directors’ residential addresses,
- people with significant control and
- its company secretary (if it has one).
The information contained in the registers has been available to the public to inspect.
What is meant by a person having significant control?
Companies have to maintain a register of persons having significant control, directly or indirectly, over the company. Those with significant control being people, who, alone or with others, have:
More than 25% of the shares;
More than 25% of the voting rights;
The right to remove or appoint a majority of directors, or
Significant control or influence
The statement of initial control needs to include a statement that a PSC is not disqualified under the directors’ disqualification legislation or be so qualified but for the court’s permission to act.
What happens after a company is registered?
Effect of registration:
The Registrar will review the documents submitted before issuing the company with a certificate of incorporation (proof of registration). The certificate states the company’s name, registered number and date of incorporation.
On incorporation - the company can proceed to exercise its powers as a separate legal person. The first shareholder(s) will be the subscriber(s) to the memorandum and the proposed company’s director(s) and company secretary, if there is one, are appointed.
Company’s accounting reference date will also be set as the last day of the month of incorporation annually.
E.g) Company incorporated on 11 June - accounting reference date will be 30 June. First set of accounts will have to be made up to that date a year later.
What is a shelf company and what are the advantages?
Shelf Companies - Advantages
Alternative to incorporating a new company - acquiring a shelf company. Advantages:
- It already exists which avoids any delays associated with incorporation;
- A particular incorporation or accounting reference date can be secured.
- It can immediately enter into contracts even before it has been fully customised (as a body corporate), avoiding the problem of personal liability for the person purporting to enter into the contract
What is included in a shelf company package?
A shelf company package will include the following:
- A certificate of incorporation;
- The statutory company books which contain the registers;
- The memorandum and articles of association;
- Stock transfer form to transfer the shares from the subscribers to the new shareholders;
- Letters of resignation from the first director(s) and company secretary (if there is one); and
- A certificate confirming the company has not traded
What administrative duties are required at the board meeting after purchasing a shelf company?
1) [Processing stock transfer forms] Executed stock transfer forms will be approved by the director(s), new share certificate(s) will be issued to the new shareholders and the register of members will be updated
2) [PSC register] Supply updated information for the register of persons having significant control and firm relevant forms PSC01 and PSC07
3) [appointment of directors / secretary] Appoint further directors (if relevant) and a company secretary (if relevant) by board resolution and notify Companies House within 14 days using Forms AP01 (directors) and AP03 (company secretary)
4) [change registered office] If necessary, by board resolution change the appropriate registered office by filing a Form AD01 at Companies house and change the registered appropriate email address if necessary, online
5) [change accounting reference date] If required, change the accounting reference date by board resolution and lodge Form AA01 at Companies House
6) [change company’s name] If required, change the company’s name by a written shareholders’ special resolution (if the shareholders and directors are the same people) and file Form NM01, a copy of the special resolution and requisite fee at Companies House. If the directors and shareholders are not the same people, then this may need to happen at a later stage depending on the method used to pass the special resolution.
7) [Allot and issue shares] Allot and issue further shares if required by board resolution. N.B: private companies with Model Articles only have one class of shares so if the new shares are to be of the same type, the directors should have an automatic authority to allot. Within one month, notify Companies House of the allotment by filing a Form SH01.
8) [Verify identity of new directors] Any new directors or PSCs will need to verify their identity at Companies House.
Form required when:
Private company limited by shares adopting the Model Articles in their entirety
IN01
Form required when:
Change of registered office address
AD01
Form required when:
Return of allotment of shares
SH01
Form required when:
Termination of appointment of director
TM01
Form required when:
Termination of appointment of company secretary
TM03
Form required when:
Change of director’s details
CH01
Form required when:
Change of secretary’s details
CH03
Form required when:
Particulars of a charge
Particulars of a charge subject to which property or undertaking has been acquired
Statement of satisfaction in full or in part of a charge
MR01
MR02
MR04
Form required when:
Change of accounting reference date
AA01
Form required when:
Give notice of persons with significant control
PSC01
Form required when:
Give notice of change of details for persons of significant control
PSC04
Form required when:
Give notice of ceasing to be a person with significant control
PSC07
Form required when:
Notify a purchase of own shares
SH03
