Company Law Flashcards
When does a person become a shareholder?
When their name is entered in the company’s register of members as a holder of shares - s.112 CA 2006
Who can be a director?
Directors can be natural persons or other companies.
But at least one director must be a natural person - s.155 CA 2006.
What decisions must be taken by the shareholders?
- Making changes to the company’s constitution (articles)
- The approval of certain transactions between the directors and the company
- The declaration of final dividends
What is the memorandum of association?
No longer a constitutional document - s.17 CA 2006.
Provides a snapshot of the company on incorporation.
All companies must have one - s.8 CA 2006.
What are the articles of association?
The main constitutional document.
Main purpose is to regulate the relationship between the shareholders, directors and company.
All companies must have them - s.18 CA 2006.
What are the main methods for forming a new company?
- Online incorporation.
- Internal company search unit within a law firm, or third party incorporation agent used by law firms.
- File paper copies at Companies House.
What must be given to the Registrar for a company to be registered?
- A copy of the memorandum.
- An application stating: company name, location of registered office, liability of members, public or private, copy of articles, statement of capital and shareholdings, proposed officers and any PSCs.
- A statement of compliance (s.13)
- The fee
What is set out by the certificate of incorporation?
- Name of the company
- Registered number
- Date of incorporation
What should a company’s statutory books include?
- A register of directors and secretaries
- A PSC register (Part 21A CA)
- Copies of all directors’ service contracts (s.228)
- Register of members (s.114)
- Record of shareholder and board meeting minutes and resolutions (s.248 & s.355)
- Copies of charge instruments
What changes will have to be made to a ready-made company?
- Name of company
- Articles of association
- Shareholders (using stock transfer form)
- Directors (by board resolution)
- Registered office
- Accounting reference date
- Auditor
- PSC register
What is a private limited company?
Any company that is not a public company - s.4(1) CA.
Ends with the word Limited or Ltd - s.59.
What is a public limited company?
A company whose certificate of incorporation states that it is a public company - s.4(2) CA.
Ends with the words ‘public limited company’ or ‘plc’ - s.58.
What are the principal differences between a private and public company?
- Name (ltd/plc)
- Share capital: no requirement for a private company to have any minimum share capital. Public companies must have at least £50,000 (£12,500 paid up).
- Number of directors: private company needs only 1 director, while public company must have two
- Company secretary: private company is not obliged to have a secretary.
- Annual general meetings: private company is not obliged to have an annual general meeting.
- Regulation: public company subject to greater regulation.
Which provisions are to be treated as part of the articles of association under s.28 CA 2006?
- Statement of authorised share capital: no longer necessary to have a cap on number of shares it may issue. This can be removed from the articles by an ordinary resolution.
- Statement of the company’s objects: may be removed by special resolution.
- Company’s name: not necessary to amend the articles if the name is changed.
- Statement that liability is limited: should always be included in the articles
What is the legal effect of the articles of association?
The articles of association are binding on both the company and its members - s.33(1) CA.
But members cannot enforce any rights contained in the articles that are not relevant to their capacity as members. I.e the protection afforded to shareholders is limited.
Conflicting authority as to whether members can enforce the articles against each other directly. A shareholders’ agreement is advised.