Chapter 4 - The Members Flashcards
What two criteria must be met in order to be a member of a company?
Consent to be a member, be entered in the company’s register of members
Other than as a shareholder what other forms can company membership take?
Guarantor or for an unlimited company without a share capital some other method of dividing ownership
Is there a minimum or maximum number of members that a company must have?
Minimum of 1, no maximum
What are the main disadvantages of registering shares for a long- term investment in children’s names?
As minors children can void any obligation to pay funds to the company and a minor cannot deal with any transaction themselves which would require a court order to ensure it was in their interests
Can anyone become a member of a company?
Subject to the Articles any natural person or entity with legal capacity may be a member. However subsidiaries are generally prohibited from owning shares in the parent entities
A professional partnership wishes to acquire some shares. How should they be registered?
In the name of one or more partners unless it is a Scottish partnership which can register the shares in the partnership name
In order to establish the rights of a shareholder which documents should be referred to?
The Articles or any separate terms stipulated at the time of the issue of the shares
Are members always shareholders?
No – some members are guarantors
How can a guarantor transfer their membership to someone else?
They can’t
Does the guarantee cease immediately on the guarantor resigning?
No it remains for one year
Which type of organisation is best suited to use a guarantee company structure?
Not for profit
Why is aligning the interests of directors and shareholders difficult to achieve in practice?
Shareholders have many different reasons for becoming and remaining as shareholders so their interests are not aligned with each other
What are the main differences between activist and pressure group shareholders?
Activist shareholders use their holding and influence to bring about change. Pressure group shareholders try to bring about change through publicity achieved through campaigns and meeting disruption
Rights attaching to shares can be divided into three broad categories, what are they?
Rights to vote, rights to distribution of profits and rights to capital
What protection is given to members holding non-voting class shares if the members holding voting shares resolve to amend the Articles in general meeting to increase their dividend rights?
Rights attaching to shares of a class cannot be amended without their consent, even if they are non-voting shares
