BL1 Flashcards

Question

How many managers (i.e. directors) are required for an LLP?

Answer 1

at least 2

Answer 2

Majority vote of the partners Three things require unanimity under PA (inc adding a new partner) Can be varied in partnership agreement

Answer 3

Majority vote of members Unanimous: - adding new partner - changing nature business - changing terms of contract Can be varied in an agreement

Answer 4

sole - sole trader personally partnership - members personally

Answer 5

The company itself

Answer 6

No accounting requirements Just name and address for service

Answer 7

Accounts must be **produced** but not audited or published Only names and addresses for service

Answer 8

Must be audited and published unless exempt. May be abbreviated.

Answer 9

ALL must keep adequate accounting records. Ds must ensure accounts give true and fair view state of affairs. Prep director's report (unless small or micro) and circulate: - accounts; - D's report; and and - auditor's report (if req) ^ to shareholder, auditor, debenture holder and anyone else entitled arts of assoc to notice of GM File accounts 9m b/6m b/3m after (priv/pub/newly incorp) small = balance sheet max £5.1m, turnover max 10.2 mil, max 50 employees. micro-entity = balance sheet max £316/turnover max £632k/max 10 employees

Answer 10

Fixed only

Answer 11

LLPs, public and private limited companies Easier to expand May need to make personal guarantees

Answer 12

Any duties under partnership agreement (inc implied under PA 1980) Fiduciary duties: good faith, not to make a secret profit.

Answer 13

Fiduciary duties - good faith (🙏mbm is indeed) - account for money received on behalf LLP (would m) - render true accounts and full info on matters concerning LLP (defo loves that0) Some statutory duties under Insolvency Act

Answer 14

Statutory duties under Companies Act and Insolvency Act

Answer 15

Whenever they want

Answer 16

1. Notice (written or oral) 2. Bankruptcy 3. Illegality 4. Death 5. Charge 6. Termination of undertaking - if created by undertaking Dissolved w IMMEDIATE effect (can modify under Partnership Agreement)

Answer 17

Application to registrar to strike off - company must not have carried out any activity for three months prior; or Voluntary or compulsory liquidation

Answer 18

Not formally But some rules under PA 1980 - often supplemented with a partnership agreement

Answer 19

1. Articles of Association 2. Memorandum of Association 3. Certificate of Association 4. Current statement of capital 5. Copies of any court orders/legislation impacting the constitution 6. Any shareholder resolutions impacting constitution 7. Certain agreements involving shareholders

Answer 20

Governed by almost all same rules as companies are under CA 2006 (LLP Regulations 2001 and 2009) Doesn't have Memorandum and Articles of Association. Advise a Limited Liability Partnership Agreement.

Answer 21

LL IN01 and small fee

Answer 22

IN01 and small fee (contains statement of compliance) Memorandum of association Articles (unless using default)

Answer 23

Managers Owners

Answer 24

No Owners are called members

Answer 25

1. Constitution states it is a public company 2. Words PLC or Public Limited Company at end of name 3. Owners must invest a minimum of 50k allotted share capital, up to a quarter of which paid 4. Have reached certain size, reputation and growth (SRG such real grievance can't set up immediately!)

Answer 26

- More prestiguous - Raise money by offering shares to public :( - More scrutiny and regulations - Admin burden e.g. secretary

Answer 27

People already connected with the company or other targeted individuals

Answer 28

Date of incorporation with CH

Answer 29

Certificate of Incorporation

Answer 30

Shareholders don't buy shares but guarantee debts up to a specified amount - usually £1

Answer 31

Professional indemnity insurance

Answer 32

Adv LLP - SLP - Floating charges - Income tax (retain personal allowance) FLEXIBLE: - Not subject CA strict requirements = more freedom decisions - No shareholders = more control - Not required submit as many CH docs Disadv - public info - file accounts/admin - CH (e.g. AP01/TM01/register w CH) - claw back provisions insolvency (floating / preference / ) - misfeasance / wrongful / fraudulant - can't fund via shares

Answer 33

Minutes of meetings Maintain statutory registers File certain docs CH Accounts audited and file at companies house

Answer 34

Bound by CA 2006 Limits how many and what decisions can make Directors for some / shareholders for some Can't just terminate business like that.

Answer 35

- Certain financial info - Keep company registers open for inspection on payment of fee (failure criminal offence) - Info re directors, shareholders and many significant decisions (must also file w Registrar)

Answer 36

Security/loan over all of a business' assets (present and future) Can sell these assets Helps growth bcos can do lots of borrowing Crystallizes when fail to repay loan (fixes on remaining assets - city have a right over it)

Answer 37

Charge over specific property e.g. machinery

Answer 38

Online, post or software Solicitors/accountants may do for fee Solicitors may have shelf company can use

Answer 39

- Name and registration number - Date incorporation - Whether limited or unlimited (if limited, by shares or guarantee) - Private, public or LLP - Registered office E/W or S/NI - Signed by registrar or official seal

Answer 40

If submitted CH application by: - post or TP software, HMRC application within 3 months of starting to do business - Online - done automatically

Answer 41

No requirement to register Must not infringe trademarks Own name(s) or business name

Answer 42

Not to infringe trademarks Register at companies house Can't be too similar to an existing company End in LLP, Ltd or Plc (or Welsh equiv) No connection with gov't department Can't contain sensitive words (inc if misleads re location/regulatory body) Not offensive

Answer 43

No - can do after incorporation. Similar to usual name requirements.

Answer 44

When picking name, carry out trademark search (diff to CH search) Too similar - could still be sued in tort of passing off

Answer 45

Same part of UK Official docs (inc CH) to be sent to Where certain internal CH docs must be kept

Answer 46

**Board resolution** **AD01** (a don't 1nt to change address !!!!!!) Can send docs previous office for **14 days** after change

Answer 47

- Name, residential address, service address and DoB

Answer 48

Credit reference agencies and specified public authorities (CRAs and SPAs)

Answer 49

Application Must be proof of serious **risk of violence or intimidation** to them/family (e.g. if do animal testing)

Answer 50

name and service address not resi

Answer 51

Admin tasks (e.g. filing Companies House docs and keeping board minutes ) No

Answer 52

FIRST shareholders Name, **address** and details of shareholdings - address doesn't need to be residential. - no need DoB

Answer 53

part of IN01 1. Class - ordinary or preference 2. Number of shares 3. Aggregate nominal value (number of shares multiplied by nominal value) 4. Total amount unpaid (if any) 5. Prescribed particulars for each class - i.e. any rights attach to certain class e.g. right to dividend (see sep card) 6. Details for each 'subscriber' - name - address (breakdown of above)

Answer 54

(part of IN01 under statement of capital) For each class of share (ie ordinary and preference): 1. What share of **dividends** they receive; 2. Can they **redeem** (ie exchange) shares for money; 3. Whether can **vote** on **certain matters**; and 4. **How many** **votes** their shares entitle them to.

Answer 55

What shares were originally purchased for (e.g. £1 share)

Answer 56

Board meeting decision Shareholder resolution approves Directors execute (unless articles otherwise)

Answer 57

(just example in textbook not imp) - - Notice period for board meetings - Minimum number of directors for valid board meeting - Whether board members can refuse a new shareholder - When director can be prevented from participating in a board meeting

Answer 58

- Statement that subscribers: 1. wish to form a company 2. agree to be subscribers; and 3. take **at least** one share each - Signed - In the correct form (copy of this on CH)

Answer 59

MA 14 Directors prevented from voting and counting in **quorum** if **personal interest** e.g. small business - probs wouldn't have enough directors to vote at meetings BUT cannot remove statutory duty to declare nature and extent

Answer 60

If not provide another set of articles when incorporating

Answer 61

Internal rulebook

Answer 62

No. Pre-2006 use Table A instead of model articles unless updated

Answer 63

**Table A**: - **21 days** notice GM if **special resolution** Model - at least **14 Clear Days'** notice for GM - no diff if SR 95% table a consent short notice table A: OR to remove ASC and OR to activate authority to allot

Answer 64

Special resolution Copy new articles - 15 days of them taking effect Copy of special resolution - 15 days of GM (doesn't say anything about which form so doubt need one)

Answer 65

Voluntary and mandatory Voluntary - can exclude/amend in own articles. Will say 'subject to company's articles'

Answer 66

OVER > 25% of voting rights; or OVER > 25% of shares; or Right to appoint or remove majority of Board of Directors (nb generally just shareholders)

Answer 67

IN01 - tick box to indicate whether: 1. Over 25% - 50% (of shares/VRs) 2. 51% - 75%; 3. 75% or more Because: 1. Can block special resolutions and possibly ordinary 2. Can block ordinary 3. Can pass special (box guides you on this)

Answer 68

1. Can block special resolutions and maybe ordinary too 2. Can block or pass ordinary resolutions 3. Can pass special resoluto

Answer 69

**Trading certificate** which proves it can: 1. Trade and borrow; and 2. Satisfied allotted share capital requirements And submit this to Companies House on **SH50**

Answer 70

**Special resolution** approving: - approving re-registration of thecompany - altering name (add Plc or Welsh equivalent) - altering articles so in suitable form At time SR passed, must have satisfied share capital requirements Trading certificate not required

Answer 71

File at CH: - Special resolution - Application for reregistration (**RR01**) - Fee for re-registration - **Revised articles** - **Balance** **sheet**; and - **auditor confirmation** or valuation report re any **allotted shares** between date of balance sheet and passing of special resolution

Answer 72

Companies which law firms have already set up so clients can use at late notice Usually two directors and two shareholders who own £1 ordinary shares each (employees) Before first board meeting, **stock transfer form** At board meeting - **appoint new directors** Once taken effect, **resign**

Answer 73

Quicker and cheaper than CH same-day registration service

Answer 74

1. Want a chairperson? 2. Want a bank account? Rules on who can spend what etc. 3. Company seal - do we want one to execute docs? 4. Do we want to change name? 5. Accounting reference date 6. Appoint auditor 7. Service contracts (employment contracts for directors - terms? dish any out?) 8. Insurance - what type?

Answer 75

Special resolution or as per articles Submit NM01, fee and special resolution

Answer 76

1. Complete HMRC **corporation tax form** 2. **Register** company with **HMRC** to arrange PAYE tax deductions and National Insurance payments 3. **Approve VAT application** (although can now do whilst registering company)

Answer 77

Casting vote in event of board resolution being tied - Prevent stalemate but more control

Answer 78

Board resolution Under Model Articles - if using seal, must also be signed by one authorised person and witnessed ^ can disapply

Answer 79

Last date of the month in which they were incorporated Can change (e.g. to align with tax year) (e.g. 2 November incorporated, would be 31 November) **Board** resolution **AA01** form (aa = accounting action) (board 'actions') 🥋

Answer 80

Shorten as many times as like Can't last over **18 months** Can amend more than **once every 5 years**

Answer 81

Small, micro and dormant Small: - balance sheet not more than £5.1 mil - turnover not more £10.2 mil (double ^) - max 50 employees Micro: - balance sheet max £316k - turnover max 632k - max 10 employees

Answer 82

Board of directors can if two years OR less If **guaranteed term** for over two years, need shareholder ordinary resolution (but will still be Directors who enter)

Answer 83

Duties to each other governed by agreement between them Fiduciary duties - good faith, account money received and render true accounts

Answer 84

1. Decisions which shareholders alone make and director's cannot reverse (e.g. changing articles of association and changing name of company - both special resolutions) directors must ensure correct paperwork completed/CH notified 2. Decisions which give directors PERMISSION to enter certain contracts which carry particular risks or where directors could benefit personally from contract (e.g. SPT) (NB shareholders can never enter contracts on behalf company - just permit Ds to)

Answer 85

Collectively in board meetings Board resolutions No - can delegate (e.g. HR Director) Can also do written resolution if unanimous

Answer 86

Reasonable. What is reasonable depends on facts. e.g. few minutes if same building and small company

Answer 87

State time, date and place. If not intended meet in same place, state method (e.g. Teams). Writing not required. By any director or company secretary. MA 9

Answer 88

Minimum 2. Unless only one director (can count for part of meeting where other resolutions being passed) If not complied with, meeting and decision invalid. *MA 11*

Answer 89

Declare **NATURE AND EXTENT** to DIRECTORS And even then, can't vote or count to quorum - unless articles amended don't need declare if: 1. Cannot **reasonably be regarded** as conflict of interest; 2. Other directors already **aware** or **ought** reasonably to be; or 3. Concerns terms of their own **service contract** that are to be considered by directors (but best practice always declare)

Answer 90

CAN allow to vote/count in quorum CANNOT remove obligation to declare

Answer 91

In meeting. - Show of hands. 👋 - Each director one vote. If chairman and a tie, can have casting vote (in favour). Simple majority (OVER 50%) always (no poll vote since they don't have shares) Or by resolution in writing or other method if **UNANIMOUS** decision

Answer 92

OVER (!!!) 50% vs at least 75% (so 50.1% vs 75%+)

Answer 93

Shareholders meetings Board resolution Or can be requisitioned by shareholders

Answer 94

Public - at least annually Private - no requirement

Answer 95

- DIRECTORS (not sec) give notice to every shareholder, **director** and auditor and anyone else under arts of assoc - Given in hard copy, electronic, website or combination - Set out: - Time, date and place (DTP) - General nature of business dealing with - If SPECIAL resolution proposed, its **exact wording** - Each shareholder's right to appoint **proxy** to attend on their behalf NB: this is diff to a notice to consent to short notice

Answer 96

14 CLEAR days from date notice deemed received by shareholders 48 hrs after if post or email - otherwise deemed received then and there Clear = not day of issue and not day of meeting - also any day regardless bank hol/weekend etc (so 14 days in between those dates) (e.g. issued on 1 March, would be 16 March) (add 2 days on if post or email) (if received on a Monday, should be a Tuesday)

Answer 97

Handed = there and then Posted or emailed = 48 hours after sent

Answer 98

Two Unless one shareholder, then one. ma 11 same as Ds!

Answer 99

Shareholders vote in **GM** on one vote for each share they own (usual = one vote each)

Answer 100

are all/**majority** in number of shareholders; and together hold not less than 90% in **nominal value** of shares giving **right to attend and vote** ^ GM of Company to be held at DTP ... agree meeting (and any adj) deem duly called Resolutions set out in notice convening meeting may be proposed and passed Notwithstanding Dated: __ Signature of ___ : _____ (95% table A/public)

Answer 101

Board: - hand, post, email or website the proposed OR or SR to **ELIGIBLE** SHAREHOLDERS only. i.e. those entitled to vote on resolution (so not auditor) Must include: - how to signify; and - deadline for returning. Nb: shareholders can requisition

Answer 102

SOON AS majority of eligible members SIGNIFIED (ordinary / special) One vote per share (!) ^ makes sense that this is why only do poll vote in meetings

Answer 103

A) Directors B) Ordinary resolution shareholders

Answer 104

can reduce below 5% can't inc above 5% power to the people !

Answer 105

**5%** paid up VRs - articles can reduce below 5% but not inc above (regardless pub/priv) Can require circulate with statement up to 1000 words on subject matter must circulate eligible shareholders within 21 days those ***Shareholders*** must pay company's **expenses** in complying.

Answer 106

Request from shareholders holding at least 5% paid-up capital and of voting rights Must state general nature of business to be dealt (no need to pay expenses)

Answer 107

Fine for company AND all its defaulting officers Usually criminal offence

Answer 108

- Register of members and register of directors (i.e. statutory books) For 10 years: - minutes of all GMs and board meetings - outcome of any written resolutions (think of it as written resolutions are like the equivalent of minutes)

Answer 109

1. Registered office; or 2. SAIL address (notify CH of address on AD02, moving to SAIL on AD03, from SAIL to office on AD04); (AD01 for registered, AD02 for SAIL etc) 3. Statute books - register members and directors only - can elect to just keep on CH central register. AD for ADdress

Answer 110

Small: - balance sheet under £5.1m - turnover £10.2m or under; (double) - no more than 50 employees Micro-entity: - balance sheet under £3126k - turnover £632k or under - no more 10 employees (B comes before T - balance. turnover.)

Answer 111

- Auditing - Preparing director's report still need send CH

Answer 112

- Private: 9 months BEFORE accounting reference period ends - Public: 6 months before - Newly incorporated: 3 months AFTER

Answer 113

Confirming CH info correct Within 14 days of company's confirmation date (anniversary incorporation) Late = criminal offence

Answer 114

Director, company secretary and auditor NOT SHAREHOLDERS

Answer 115

- Varies between companies - Deal with legal administrative requirements (under CA) - Usually board/GM minutes - Smaller companies - usually just an extra responsibility - If no secretary, can be performed by a director or someone authorised by Ds - Can have a corporate one (but will act through the appointed human)

Answer 116

Resigned or by board resolution

Answer 117

- AP03 (human) or AP04 (corporate secretary) **14 days appointment** (or IN01) - Keep register of secretaries with particulars (if private can just ensure info on CH central register) - resigned/removed - **14 days** on **TM02** and amend register - - change on **CH03** (human) or **CH04** (corporate) and amend register

Answer 118

Prep report on company's annual accounts to send to shareholders. State on report if accounts give** true and fair view** / prepared properly **Qualified** if think fraud/unethical dealings

Answer 119

Directors first time After that, either directors or shareholders by ordinary resolution Must be: - Independent (i.e. not connected with company) - Qualified (certified accountant) (high IQ to be auditor! (Usually appoint accountancy firm)

Answer 120

Usually deemed reappointed automatically each year. Exceptions include: - appointed by directors (first auditor will have been) - articles require reappoint each year ^ so better if hsareholders appoint

Answer 121

Case law established no duty to shareholders or potential shareholders when doing audit - would have to be proximity between them. Could be sued **negligence** by company. Two **criminal** offences: a) knowingly or recklessly including misleading, false, **deceptive** material b) **omitting** certain statements which C Act requires to include

Answer 122

Anytime Shareholders Ordinary resolution Shareholders must give SPECIAL NOTICE to company - i.e. notice intent remove 28 days before GM itself (not 28 days before call) (can resign by giving notice)

Answer 123

Must ALWAYS (if removed or resigned) deliver statement to company explaining circumstances re ceasing office

Answer 124

1. Obtain from existing shareholder (buy, receive as gift or transmission if dies/bankrupt and decide become shareholder instead transferring to a TP) 2. Allotted by company (create and sell new shares)

Answer 125

Soon as practicable Latest two months after transfer lodged

Answer 126

Within 2 months of allotment Or 2 months of transfer being lodged (and old certs must be destroyed)

Answer 127

- OVER 25% voting rights; or - OVER 25% shares; or - right to appoint/remove majority of directors; or - right to exercise or do actually exercise signif influence or control over the company (i guess de facto and shadow Ds) (maintain even if no one has significant control)

Answer 128

- PSC01 by any person appearing first time - PSC02 any legal entity first - PSC04 individual any chance of details - PSC05 corporation any change of details 14 days from date company made change in PSC register (14 y/o when do PSC)

Answer 129

Breach of contract cos articles act as contract between shareholder and company, and shareholder to shareholder I and ---- e.g. against other shareholder if infringed voting rights or right to profits

Answer 130

Binds parties who are agreement to it Get a remedy if term breached Articles apply to all shareholders (not just those signed up) Articles apply to a buyer of transferred shares, shareholder agreement only if they sign up to it. Term must relate directly to their rights.

Answer 131

1. Confidential (no need to lodge at CH) 2. Control minority shareholders - sometimes provide veto - little power under articles ^ eg won't vote in favour of changing articles unless all in favour 3. Some rights and obligations *better suited* to contract than articles, since about things that are wider than the shares themselves - e.g. that certain shareholders must lend money to company

Answer 132

1. Restrictions on transferring shares (we 😍 want to keep !) - e.g. deed of adherence 2. Bushell v Faith clauses "[] shall have **weighted** voted rights **at a RATE** of on any res to remove as D" 3. Non-compete clause 4. must vote against removal of other as d 5. must do certain things - e.g. lend

Answer 133

Can't restrict shareholders from voting particular way in board meetings if they are also a director

Answer 134

1. Apply **court** call GM if would not be held otherwise - e.g. shareholders refusing to attend so quorate 2. Circulation of written statement re anything to be dealt with at GM: **5% voting rights** (or 100+ shareholders who have paid up to £100 on shares) ^ max 1000 words (this is diff to written res statement)

Answer 135

1. dividends if profits available and directors recommended amount, which shareholders approve. 2. Apply company wound up if** just and equitable** 3. **Remove** director or auditor 4. **Inspect** for free: (a) minutes GMs and shareholder resolutions (not always board mins) (b) all statutory registers (c) D' service contracts and **indemnities** (c) buyback shares contracts 5. Receive copy of annual **accounts** and reports 6. Seek **injunction** to restrain company doing something constitution prohibits

Answer 136

1. Other holds **majority** of **voting rights**; or 2. Other company is a shareholder with right to **appoint or remove** majority of directors; or 3. Other company is shareholder and has agreemnent w other shareholders **that it gives it control majority VRs**; or 4. **Subsidiary** of another **subsidiary** of the company

Answer 137

No other shareholders than the holding company or any of that company's subsidiaries (or people acting on behalf of self or its subsidiaries)

Answer 138

Where two or more individuals jointly hold one share Register of members must record both names but only one address

Answer 139

Limit liability - if one is wound up, others continue operating (would just lose shares in that company) Subsidiaries

Answer 140

Give shareholders right to: - attend and vote GM - receive declared dividends Sometimes ordinary A and ordinary B shares - can treat shareholders differently - but rules must be in articles (if not, shares equal) e.g. issue dividends to ordinary A but not ordinary B

Answer 141

Ordinary shares Preference shares

Answer 142

enhanced rights above ordinary shareholders must be set out in articles e.g. guaranteed right to dividends, ordinary shareholders only receive if profits left after preferential shareholders paid Often give up voting rights in return Will be cumulative or non-cumulative

Answer 143

Types of preference shares Cumulative: paid any missed dividends from previous years as well as current years if sufficient profits available (their right to previous years ranked ahead ordinary shareholders right to shares for current year) Non-cumulative: if not paid in particular year, lose right to that year's dividend and no right to receive in future (if poor financial year tough)

Answer 144

Available for preference shareholders only A right to profit share in addition to or instead of a fixed dividend As set out in articles e.g. 10% more than whatever declared dividend is e.g. X% of company's profits In addition to their other preference share rights

Answer 145

1. Unfair prejudice petitions 2. Derivative claims (no point using rights to requisition WR/GM etc if don't get on with shareholders)

Answer 146

Any shareholder **apply court** for order for **remedy** where feel unfairly prejudiced as a SH because either: 1. Company's **affairs conducted** in unfairly prejudicial manner to interests of some or all of its members (inc them); or 2. **Actual or proposed act or omission** of company is/would be so prejudicial ^ assess objectively (bystander believe unfair) harder to argue if permitted in articles

Answer 147

- Diverting **opportunities** to **competing business** where majority shareholder has an interest - **Excessive pay** to directors - **Excluding from management** when shareholders' negotiations (during incorporation) **made think** would participate - Shareholders **remove auditor** because disagree on audit procedures

Answer 148

1. Buyback (company or shareholders) 2. Can't change arts w/o court permission 3. Permission unfairly prejudiced brings derivative

Answer 149

Expensive and time-consuming Court requires a lot of evidence Hard to get as most held by company And need an expert's report to put value on shares or show prejudiced

Answer 150

Instigated and brought by shareholder Company is the claimant (usually proceedings board decision but allows shareholders to instigate since board aren't acting) D can be anyone BUT USUALLY a director For wrong done to company Due to act or omission of DIRECTOR Which is a breach of **duty** or breach of **trust** (Ds duties. Fiduciary profit etc)

Answer 151

1. issue claim 2. apply court permission continue claim 3. court WITHOUT hearing will allow if **prima facie case** for continuing 4. If find a prima facie case, may give directions on evi company must provide (may adjourn to allow to obtain evi) 5. List **hearing** to determine whether to give **permission** to proceed

Answer 152

1. Applicant not promoting **success of company** 2. The act / omission has **not occured** (even if authorised); or 3. Act/omission already occured and was **authorised**

Answer 153

- good faith? ⛪️ - how imp someone acting in best interests of company would view continuing as being? - authorised? - had company decided not to pursue claim? - could the shareholder pursue a different course of action? - evidence of **independent** shareholders (starbs guy) (parishiners)

Answer 154

Paid by shareholder if refused If permission granted, company meet all legal costs AND the other party's legal costs if claim is UNSUCCESSFUL ^ usual rule

Answer 155

Director in PERSONAL capacity or someone CONNECTED with them (immediate relative) Buys from or sells to company A non-cash asset Of substantial value

Answer 156

Shareholders consent via ordinary resolution AND If director / connected person is also a director of the holding company (or connected with one of its directors) ...must be approved by ordinary resolution of parent's shareholders

Answer 157

1. Members of fam i.e. spouse, child, stepchild, parents, partner - enduring reli - or child/stepchild of director's partner - NOT siblings, grandparents, grandchildren, aunt/uncle, nephew/niece 2. company in which D and/or persons connected (above) individually or collectively own in a comp: - **AT LEAST** 20% shares; or - **OVER** 20% voting rights e.g. D owns 10% and daughter owns 10% - together they own 20%

Answer 158

Non-cash = Property or any interest in property other than cash (so NOT a loan)

Answer 159

- acting in capacity as member - WHOLLY owned subsidiary of the other company; or - is between a holding and subsidiary; or - between two wholly owned subs of same holding company

Answer 160

*Voidable, account and indemnify seems to be common trend in business law* Transaction voidable AND May order any of the following to account for gain and indemnify for any loss: - Director who company entered arrangement with; - The connected person AND that D; and - Any director who authorised the arrangement (NB: first 2 could alternatively make director of holding company liable)

Answer 161

Can Newly Qualified Really Advise Can - calling Newly - notice Qualified - quorum Really - resolutions Advise - administration

Answer 162

- change company name - forcing directors to take or refrain from taking specified action - amend articles of association - reduction in share capital (dont think need to know) (presume it means share buyback out of capital) - disapplication of shareholder pre-emption rights (offered shares being allotted) - voluntary **winding up** - Changing the company’s status by registration - e.g. from private to public (re-registration)

Answer 163

- Changing accounting reference date - Changing address/registered office (admin stuff) others just added myself - there are so many others lol - recommending dividends - entering contracts - commencing liti - calling GM (although sometimes sharheolders can)

Answer 164

- Name change (special) - Amending articles - Remove director or auditor (ordinary) THERE ARE OTHERS e.g. - re-registration (although maybe other ones are approving stuff actually i guess)

Answer 165

PRIVATE companies only Public CANNOT! (i dont think LLP can either but can't find clear answer - no statutory authority anyway)

Answer 166

Entering SPT Allotting / transferring shares (i.e. directors initiate, shareholders approve and directors execute) Appointing director (directors OR ordinary shareholders) !!!!!!!!

Answer 167

Removal of director Removal of auditor before their term of office expired ^ need right to make representations defo if D anyway

Answer 168

Midnight on 28 days following circulation of resolution (dm when received) (e.g. sent on 1st, lapse date is 28th at midnight) - day sent treated as day 1 Unless articles state otherwise (i.e. lapse date)

Answer 169

must call it within 21 days and general meeting itself must be no later than 28 days from date of notice ^ so max of 7 weeks after notice (so ideally don't wait 21 days !)

Answer 170

No minimum time period. Once signified and returned by requisite percentage eligible numbers. (can be pretty fast)

Answer 171

10% Same public / private

Answer 172

own 20% shares; or right exercise OVER 20% voting rights could be combo of shareholding (they could hold 10% and their spouse 10%)

Answer 173

- £100k or more; OR - more than £5k and more than 10% company's net asset value

Answer 174

Each has one vote at GM - regardless of shareholding Show of hands at GM Or poll vote

Answer 175

Before GM At GM before voting At GM after voting (via hands) - would override the hand vote BUT NOT AFTER (makes sense - could be like days after and board start making decisions then they change mind)

Answer 176

(notice) 1. Board meeting 1 (notice) 2. General meeting (notice) 3. Board meeting 2 Sandwich !

Answer 177

Must declare. CAN vote but it WON'T count ONLY where: 1. *BUYBACK* of some / all their shares; or 2. *RATIFYING* breach of director *duty* meaning can still vote in SPT (this is 1000% right checked lexis) and can vote on own removal! ^ some part of this queue card lol is 318 CA

Answer 178

Not sufficient quorum for initial board meeting Shareholders could requisition a general meeting

Answer 179

No. Not like shareholders where can vote but doesn't count.

Answer 180

14 days (nb this is internal but same as CH)

Answer 181

14 days **after** updated own register. (beginning with day after updated register) PSC did aged 14

Answer 182

No, but every company needs at least one director who is a natural person. Other director(s) could be companies

Answer 183

If indicate to each other that **unanimously share common view** on a matter e.g. text message from each director, written resolution

Answer 184

CANNOT override or retrospectively alter Can veto prior to decision in certain circumstances e.g. SPT Can force or refrain director from taking specified action via special resolution

Answer 185

Any person occupying the position of director, regardless of their title (so if fulfil that, even if say called a partner, they are a director)

Answer 186

- their remunerations and benefits - the services they undertake

Answer 187

Both on Board and registered at CH Executive directors - have an employment contract (service contract/agreement) Non-executive directors (NEDs) - **don't have service agreements** - don't receive **salary** **Receive directors' fees** for attending board meetings NEDs can be more objective as less invested - so common in public companise ^ nEd - not EMPLOYMENT CONTRACT-ed director ( not clear if employed or not but don't stray into that )

Answer 188

By directors. Can do so via board resolution.

Answer 189

- run company's board meetings - chair **general** meetings (if present and willing to) ^ checked this is correct - casting vote if there is a tie, to ensure it is PASSED by simple majority In PUBLIC but NOT private: 🚿 - acts as figurehead in dealings with shareholders and anyone outside the company

Answer 190

Someone who acts as a director even though they have never been appointed / validly appointed They can fall within definition of director

Answer 191

Ds tend act according to directions or instructions Not necessary for whole board to - just **governing majority** Not necessary act in accordance for all matters (Usually in the background and don't carry out normal functions, but will have **influence and control**) NOT formally appointed as director May be a major shareholder, lender or management consultant

Answer 192

De facto = tend to carry out job e.g. Helen D Shadow = in background and not carrying out functions but influence e.g. Laura Individual section on CA will tell whether they count as director (varies between sections and so i imagine depends what they are doing)

Answer 193

MA requires 2 quorum for director's meeting If only one, permitted to take decisions w/o board meeting.

Answer 194

If can't attend board meeting, could appoint an alternative director to vote in accordance with their wishes. Company must put special article in (not covered under MA) (diff to a proxy but like a proxy)

Answer 195

First directors = name on IN01 After that, under Model Articles: - appointed by board or ordinary resolution shareholders - board is **quickest** (no need call GM or circulate a written resolution) (can amend MA)

Answer 196

- Disqualified - Bankruptcy order - Doctor gives opinion to company that they have become **physically or mentally incapable** and may remain so for more than **3 months**

Answer 197

Notify CH in 14 days on AP01 form (individual) or AP02 (corporate) Enter director on its register of directors and register of directors' residential addresses

Answer 198

No. Separate. When in board meetings, you attend as director without thinking personal interests of shareholders and vice versa.

Answer 199

Need actual or apparent - tend to have If don't, director personally liable to the TP and company is not a party to contract - see sep card (They are agents of the company - the company is the principal)

Answer 200

Actual - express or implied consent from other Ds A) express e.g.: - in service contract - verbally given B) implied: - not expressly permitted but acted this way in past and not said anything Apparent: - w/o company's consent - but company prevented from denying authority - generally when company failed to use info to correct impression (not about Ds actions e.g. - company sec will have apparent authority to bind compan into admin contracts but not trading contracts

Answer 201

- general powers to run company - specific powers to decide on directors remuneration ^ both MA (nb only if 2 years or less)

Answer 202

GUARANTEED term over 2 years so not if company has powers to terminate w notice 2 yrs or less e.g. 10 year service contract with 1 year notice period not long-term

Answer 203

Must be approved by shareholders via ordinary resolution

Answer 204

- Need quorum of 2 and one won't be able to vote since personal interest Can: - Change company articles so can vote on service contract (or any matters where they have an interest) (special res) - Shareholders temporarily suspend model article (ordinary res) (nb they don't need to declare it if relates to own service contract)

Answer 205

- Keep memorandum of proposed contract at registered office for 15 days before GM and at GM itself (so no short notice unless written) - If written resolution, attach copy

Answer 206

Guaranteed element would be void, meaning could terminate on reasonable notice Rest would be enforceable

Answer 207

Available for inspection by shareholders at registered office during term and a YEAR after termination Shareholders right inspect without charge and within 7 days of requesting to see them

Answer 208

Director **themselves** file TM01 (individual) or TM02 (corporate) ^ or service contract may allow company to complete on their behalf by giving power of attorney File CH 14 days of resignation / removal

Answer 209

No Can only be terminated in accordance with terms of the agreement UNLESS director is in repudiatory breach of their contract - can be instantly dismissed also, ending service contract does not mean they will be automatically removed from office of director (since being a director is about what position you actually occupy - not just what called)

Answer 210

Ordinary resolution. 1. Special NOTICE required i.e. notice intention to pass to Ds at least **28 days before GM** 2. Once company receives notice, must inform director fortwith 3. When calling GM - if practicable, company must give notice of the resolution to shareholders (at same time calls GM) - If not practicable, at least 14 days notice before GM (by ad in newspaper with 'appropriate circulation' or other way allowed in articles) (call GM in 28 days or less - statute doesn't specify diff to that - but common practice is not use short notice procedure i think) 4. D entitled to - speak at GM; and - require company to send copies of written representations from them to shareholders

Answer 211

Seek legal advice and obtain evidence to help argue should not be removed Prepare written representations to send to shareholders with such arguments and prepare what say at GM

Answer 212

28 days (before general meeting at which resolution to remove director proposed)

Answer 213

Ordinary resolution (shocking !)

Answer 214

Prepare formal notice of intention to propose ordinary resolution and keep at the registered office Would then have to inform the director fortwith (yes checked this and is correct/Ds can propose general meeting to deal w it) **^ so the same except not sending to anyone and just keeping at registered office**

Answer 215

i have over complicated with this queue card. just need 28 days notice before the meeting - 1st. then 28th. nb this is what textbook says If, after special notice has been given to the company, a general meeting is called for 28 days or less after the notice has been given, the notice is deemed to have been properly given (s 312(4)). This provision is designed to prevent the board from calling a meeting before the 28 days’ special notice has expired in order to frustrate the shareholders’ intention to dismiss the director. (nb - read online that no specific law on this but tend not to do the 14 days notice)

Answer 216

Can include as a clause in company's articles Gives someone who is both a shareholder and a director greater voting rights as a shareholder if there is a resolution to remove them as a director (I would have a lot of FAITH if I was a director shareholder with this clause that would not be removed!)

Answer 217

Obliging to vote AGAINST removal of fellow shareholders from office as director If then voted in favour of removing another shareholder as director, dismissed would have claim for breach of shareholders agreement

Answer 218

1. Register of Ds containing: - DoB, address if indiv and registered office - available FREE inspection shareholders or others for FEE - registered office or central CH register (if elect) 2. Register of Ds residential addresses (individuals only) - not open to inspection - can keep on central register 3. CH01 and CH02 forms if change in particulars for indiv/corp directors 4. AP01 and AP02 appointment - 14 days appointment. TM01/TM02 resign - 14 days.

Answer 219

Criminal offence

Answer 220

The company Not shareholders / creditors Meaning claim for breach of duties will be brought by company itself (initiated by board or shareholders only if derivative)

Answer 221

- Act within powers (s 171) - Promote success of company (s 172) - Exercise independent judgement (s 173) - Exercise reasonable care, skill and diligence (s 174) - AVOID conflicts of interest (s 175) - Not to accept benefits from TPs (s 176) - DECLARE interest in proposed transaction or arrangement (s 177) - Declare interest in EXISTING transaction (criminal matter) (s 182) ^ all companies act

Answer 222

A director of a company must: (a) act in accordance with the company’s **constitution**, and (b) only exercise powers for the purposes for which they are conferred. powers conferred to promote success company so breach if act in personal interest e.g. **entering contract w/o authorisation**, despite being prohibited by articles

Answer 223

considers in **GOOD FAITH**, most likely promote success of company for benefit of members as a WHOLE Success usually means promote **share value** Must** have regard **to: (a) long-term consequences of decision (b) employees, (c) need to foster the company’s business relationships (suppliers, customers etc), (d) community and environment, (e) maintaining reputation for high standards of conduct, and (f) acting fairly between members of company. hard to prove example: - may buy factory even though terrible env't/jobs/residents etc, cos had **regard** and believe lot money for shareholders

Answer 224

Subjective Not in breach if considered in good faith that actions most likely promotes success Difficult to establish breach - even if belief misguided, as long as good faith Even if bad for env't - had regard to it

Answer 225

Judgement. e.g. told to vote that way so did cos offered something This is NOT infringed if: 1. company entered **agreement which prevents directors exercising direction**; or 2. acting in a way authorised by constitution e.g. if appointed to board by a company shareholder, must make decisions independently and ignore any loyalty to that company

Answer 226

Means care, skill and diligence exercised by reasonably diligent person with: a) general knowledge, skill and experience may reas expect of person carrying out those functions ; AND (objective) b) that director's general knowledge, skill and experience (subjective) CSD - care skill diligence KSE - knowledge skill experience OS - objective / subjective

Answer 227

Avoid situs reasonably regard likely either direct or indirect conflict with company's interests Esp exploting property, **info** or **opportunity** offered to company Regardless of whether company could have used This only applies to contract which **company NOT involved in** e.g. company declines opportunity to design new range so D carries out in personal capacity Protected if board resolution authorised - Won't count in quorum to authorise, even if excluded relevant MA

Answer 228

avoid conflicts of interest (ie company not transacted but opportunity/info/property arose within company) nb: duty declare interest proposed and existing transaction also must be declared to directors) but will not count in quorum, even if MA 14 excluded

Answer 229

Director cannot accept benefit from TP for reason of them either: - **being** a director; or - **doing/not doing** something as a director But no breach if accepting can't be reas regarded as conflict interest (e.g. breach if offered trip away **in return** for renewing service contract) Normal corporate hospitality not covered unless excessive/reas conflict

Answer 230

If directly or indirectly interested in proposed transaction or arrangement with company in any way Must declare *NATURE* and *EXTENT* of interest to other directors Before company enters transaction Flexibility as to how declare (can be written notice or at board meeting) Must relate to transaction WITH the company

Answer 231

- not aware of interest or transaction and reasonable that not aware - interest can't reas regard as giving rise to conflict - other directors already aware of interest or **ought** to be - concerns terms of their service contract

Answer 232

use s 175 if company not involved in it (e.g. had opportunity to tender but didn't)

Answer 233

If directly or indirectly interested in proposed transaction or arrangement (S 177) (MA 14 = quorum) BASO JUST DECLARE IT I KNOW THIS WELL

Answer 234

how would corresponding common law or equitable principle: Potential remedies are: - Account of profits - Compensation for loss (equitable) - Rescind any contract - Injunction - to prevent further/continuing breach - Restore transferred property - Common law damages re negligence (^ inc for duty reas care, skill and deligence) nb not really fines A C R I R C Amazing Chapsticks Read Imi Really Cool !

Answer 235

ORDINARY RESOLUTION. If director is also a shareholder, their vote won't count NEITHER will votes of any connected shareholders eg spouse)

Answer 236

Will be as if no breach at all and escape total liability Good for directors who take an action without fear on condition that shareholders will ratify if future board of directors or liquidator may pursue for breach

Answer 237

Priv LC only Shareholders pass resolution this way instead of in GM (so in writing instead of attendance) Board hand out/post/email/place on website Sign and return if want to vote in favour Right to pass this way cannot be limited under company's articles

Answer 238

Declare **nature and extent** Soon as reasonably practicable Declare at: - board meeting - writing to all directors; or - general notice given at board meeting (unlike proposed transactions where states don't have to make this way) Same exemptions as duty to declare in proposed

Answer 239

- Director not aware of interest OR transaction in Q (treated as aware of what reas ought to be) - Interest not reas regard giving rise to conflict - Other directors already aware interest / ought to be - Concerns terms of their service contract

Answer 240

A) Civil matter (looking at corresponding principles) B) Criminal offence punishable by **fine** (NB: remember existing transaction, may e.g. your mum become a shareholder or something)

Answer 241

- Wrongful trading (s214 Insolvency Act) - Fraudulent trading (s 213 IA) - Misfeasance (s 212 IA)

Answer 242

Court can order director contribute company's **assets** (inc amount available to creditors) if: - company gone into **insolvent** liquidation or insolvent administration; - before winding up, director knew/**ought** concluded **NO (!!!!) reasonable prospect** of **AVOIDING** liquidation; and - was a director at the time

Answer 243

(one defence) TOOK every **step** with view to **minimising** potential **loss** to **creditors** test for that is what reasonably diligent person would have done with: 1. KSE reas expect person carrying out that role; 2. KSE of that director. OS^ (other queue card but prevent by seeking advice/limit spending/check accounts etc - other card)

Answer 244

- seek legal/accountants advice first sign of insolvency - limit spending - check accounts regularly - keep records of actions

Answer 245

Liquidator or administrator When in insolvent liquidation or insolvent administration

Answer 246

In course of being wound up, appears business was being carried on with **intent** to: - **defraud** creditors of company or any other person; or - any other fraudulent purpose

Answer 247

Any knowingly parties to fraud make contributions court deems proper

Answer 248

No Need to show intent to defraud. Difficult to evidence. Same facts tend to give way to wrongful trading claim - which is about what ought known - easier So tend to bring claim for both wrongful and fraudulent

Answer 249

Potential criminal conviction And potentially contribute to assets

Answer 250

**BREACH OF** ANY FIDUCIARY OR OTHER **DUTY** by Ds During wind up, may be ordered to: - **contribute to company's assets** in respect of misfeasance - **repay, restore** or **account** for money/property or any part it misapplied due to misfeasance

Answer 251

1. Substantial property transactions 2. Authorisation of loans to directors 3. Authorisation of long-term service contracts 4. Authorisation of payments over £200 for loss of office 5. Other liabilities (nb 1 - 4 defo apply to shadow directors)

Answer 252

Ordinary resolution If D also director of holding co, the holding co must also pass ordinary res Loan available inspection 15 days before and at meeting Or send copy with the written notice

Answer 253

* max 50k - **expenditure** for purposes of company or to enable to perform duties (50 y/o director loves) * max 10k - minor and business **transactions** (10k would be a smaller transation than 50k) * no max: 1. defending civil/criminal proceedings relating to company or associated company 2. defending regulatory proceedings or self in regulatory authority investigation ^ any of above - Ds must authorise.

Answer 254

VOID. ACCOUNT. INDEMNIFY. or - AFFIRM. (same as SPT) Voidable Director who received loan and any director who authorised are liable to: - account for any gain; - jointly severally liable to indemnify company for any loss/damage OR affirmed by ordinary resolution within reasonable timeframe. (Ds then not liable)

Answer 255

if entitled under service contract if entitled for unfair / wrongful dismissal etc ^ company would be legally obliged ^ Aside from those, if over £200, ordinary resolution

Answer 256

- Past directors - Persons connected with a director - Any person at the direction of, or for benefit of, a director or a person connected with a director

Answer 257

Director selling shares for more than other shareholders could have obtained them for (ah yes so as if they were overcharging - doesn't say so in textbook but i presume related to pre-emption rights)

Answer 258

memorandum for particulars of payment registered office 15 days before and at GM or attach to written resolution (same as loans to Ds)

Answer 259

Recipient holds money on **trust** for company Any director who authorised jointly and severally liable to **indemnify** company for any loss (not voidable)

Answer 260

Authorisation for: - loss of office - loans - SPT - long-term service contracts baso treated same/authorisation needed same way!

Answer 261

1. Failure to maintain company records - fine - or if accounting, 2 years prison 2. Failure to file certain documents at CH - usually a fine (e.g. SR is fine) 3. Re accounts and related reports (eg misleading) - criminal and civil liability 4. Health and safety legislaton - 2 yrs prison and up to 20k fine - gross neg manslaughter 5. Bribery 6. Political donations /o shareholder approval 7. Environmental legislation - civil and criminal liability

Answer 262

Court Between 2 and 15 years (depending on behaviour) e.g. - 2 years breach fiduciary duty/file accounts - 15 years seeking money when assets exceeded liabilities

Answer 263

(really bad stuff eg fraud) - Convicted of **imprisonable** offence - **Persistent breaches** of companies legislation (CA etc) - **Fraud** on a winding up - Failing to **file** required document - **Unfit** director of **insolvent** company - Investigation finds to be **unfit** - Fraudulent or wrongful trading - Breach **competition law**

Answer 264

Consider - misfeasance - extent of failure to comply with CA 2006 - **Extent** of director's responsibility Factors against director: - using money meant for VAT/PAYE/national insurance as company's capital (Crown monies) - paying directors excessive amounts - recklessly trading whilst insolvent Factors in favour: - employing qualified financial staff - taking professional advice - personal financial investment in company (none are conclusive on own)

Answer 265

Can't be director for length of period; or Concerned in promoting/forming/managing any company Unless leave of court. Rarely granted. May be if: - **not dishonest** - business profitable so unlikely insolvent - other Ds provide a check on D's activities

Answer 266

Criminal offence - 2 yrs or fine Personally responsible for debts of any company involved in managing whilst disqualified

Answer 267

Direct or indirect interest that conflicts or may conflict with interests of company Esp where exploiting property, info or opportunity - regardless of whether company could/would have taken advantage of it Unlikely if v small shareholding in other company Or if normal corporate hospitality which wouldn't reas regard as giving rise

Answer 268

First time IN01 Then board resolution I think AP01/AP02

Answer 269

Criminal offence

Answer 270

1. Chair of meeting; 2. Directors; 3. **Two or more** who have right to vote on resolution; and 4. Shareholder with at least 10% of total voting rights on that resolution (checked this in textbook)

Answer 271

Yes But not necessarily good idea Larger shareholder could eventually use powers to remove the new director (and those who appointed if want to!)

Answer 272

once certificate of incorporation issued

Answer 273

**177 proposed:** flexibility re how to declare civil **182 EXISTING :** criminal prescriptive - at BM or by notice in writing (or general notice at BM I thinK)

Answer 274

Redundancy, unfair dismissal and wrongful dismissal

Answer 275

Statutory directors are **registered at CH** Just remember is diff to their employment contracts Want a provision saying if statutory directorship ends, automatically terminates or company have right to **terminate the emp contract** (does not prevent director from bringing wrongful dismissal claim etc) If have directorship terminated via emp contract, doesn't automatically terminate emp as statutory director of the company. **Yes this makes sense. Service agreement needs to state once service contract/employment terminated, their directorship ends and vice versa**

Answer 276

No Cos need proposed terms available 15 days company registered address before GM But could use written resolution procedure cos only requires copy contract and reso to be sent - passed as soon as minimum percentage required votes

Answer 277

no its about avoiding situations which cause conflict of interest

Answer 278

Yes as shareholder. Not as director.

Answer 279

1. Class rights Each of the following shall be deemed to constitute a variation of the rights attached to each class of shares: 1. any alteration in the articles of association of the Company; 2. any reduction, subdivision, consolidation, redenomination, purchase or redemption by the Company of its own shares or other alteration in the share capital of the Company or any of the rights attaching to any share capital; and [ADD OTHER MATTERS AS AGREED BY THE PARTIES.] (class rights are matters which cna only be done wtih consent of each class of shareholder on basis that such matters constitute a variation of class rights)

Answer 280

1. In resolution proposed re the matters listed below, any [holder of X Shares or of Y Shares] voting against shall be entitled **cast such number of votes as is necessary to defeat the resolution**: 1. any alteration in the articles of association of the Company; 2. any reduction [etc] own shares or other alteration in the share capital of the Company or any of the rights attaching to any share capital; and 3. [any resolution proposed to remove the [CLASS OF DIRECTOR]]. Any resolution proposed as a written resolution in relation to any of the matters listed in clause 3.1 shall be proposed in a form that provides shareholders with the ability to cast their votes against as well as in favour of such resolution.

BL1 Flashcards

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