BLP

Question 1

What power does a liquidator have in relation to an onerous lease?

Answer 1

A liquidator can disclaim onerous leases. This releases the company from future obligations under the lease. The liquidator has no power to void a lease.

Question 2

Order of priority of creditors for a bankrupt individual

Answer 2

1. Secured Creditors
2. Trustee fees and expenses
3. Preferential Creditors
4. Unsecured Creditors
5. Debts to spouse

Question 3

Applicability of CA 2006 to name of sole trader

Answer 3

Business name must comply with requirements in CA 2006.
* Must display real name on business letters and invoices
* Must observe restrictions on sensitive words and expressions

Question 4

What is contained in the Statement of Capital

Answer 4

Number of shares
Nominal Value
Class of Shares
Rights attached to shares

Question 5

How are partners taxed on CGT?

Answer 5

Individually. Share is calculated by:
1. Respective shares in asset (asset surplus ration in PA); if none
2. Parntership-profit sharing ratio

Question 6

Documents to submit to CH on incorporation

Answer 6

1. IN01
2. Memo
3. Incorporation Fee
4. Articles (if not using model articles)

IN01 contains all the other info like statement of capital, proposed officer, PSC, statement of compliance, email, registered office etc.

Question 7

Use of capital losses to offset trading profits and chargeable gains

Answer 7

Capital losses can only be set off against chargeable gains (not trading profits).

They can only be set off against current year and future year (cannot be carried back)

NOTE: trading losses can be deducted against TTP (capital and income profits)

Question 8

Effect of a loan being written off for a close company

Answer 8

• Tax paid by Co is refunded
• SH deemed to receive a dividend to amount of loan written off

Question 9

Financial year for CT

Answer 9

1 April - 31 March

Question 10

When must a company register for VAT

Answer 10

At month end if taxable supplies in the past year exceed £90,000

Question 11

Tax payable on Zero rated supplies

Food/sewerage and water/book/new houses/public transport/kid clothes

Answer 11

HMRC refunds input tax (e.g. if paid £30k input tax but charged no output tax, get it back)

Question 12

Authorisation of allotment of non-participating 5% preference shares

Answer 12

1. Authority to Allot - OR
2. Approval of rights attached to shares - OR

No pre-emption rights as non-participating 5% preference shares so have fixed income rights

Question 13

VAT for separate businesses owned by same person, partnership or company

Answer 13

person/ partnership: 1 VAT registration for all separate businesses

Company: separaate VAT registrations if organised into several divisions

Question 14

Value of business property when calculating IHT and and BPR?

Answer 14

Value at time of transfer (not value at date of death)

Question 15

Taper of RNRB

Answer 15

If taxable estate exceeds £2m, RNRB is reduced by £1 for every £2 over the top.

Question 16

Procedure for share buy-back from distributable profits

Answer 16

1. SH OR approving sharebuyback contract
2. circulate contract 15 days before GM (or with written resolution)

If passed:
* Keep contract for 10 years
* update balance sheet (create capital redemption reserve)
* Update register of members and PSC
* File at CH (within 28 days): SH03, Notice of Cancellation, Statement of Capital

Question 17

Resolutions and filing for allotment of shares

Answer 17

1. Cap = OR if pre Oct 2009
2. Authority to Allot = no OR if priv + same class + 1 class already
3. Pre-emption rights = SR if ordinary share + not double capped
4. Amend articles = SR if new class of share
5. BR

CH
- within 15 days: SRs, ORs, Articles
- within 1 month; SH01 (Statement of capital)

PSC / Register of member updates

Question 18

Who can appoint an administrator and how

Answer 18

Out of court (NoI (wait 5 Bdays) NOA (within 10 Bdays)
- QFCH
- Company
- DIrectors

Court permission (notify QFCH + apply to court)
- Any creditor
- All of the above
- CVA Supervisor / Liquidator

Question 19

Rollover relief when replacement asset is worth less than proceeds of sale

Answer 19

1. Amount by which the sale price of original asset exceed cost of replacement asset becomes chargeable immediately
2. Only the remainder reduces acquisition cost of replacement asset

e.g. if sale price = 200k and repalcement = 180k (20k becomes chargeable immediately and only remainder of chargeable gain can be deducted from 180k)

Question 20

Can D vote or count in quorum at board meeting in relation to fixed term service contract?

Answer 20

No

Question 21

Regulatory requirements as to members and officers for plc

Answer 21

1 Member
2 Directors
1 Company Secretary

Question 22

Share capital requirements for plc

Answer 22

nominal value of alloted share capital must be at least £50k

SH must pay at least 25% of nominal value and whole of any premium

Question 23

What must Ds do if plc net assets are 50% or less of its called up share capital?

Answer 23

Convene a GM to consider the problem (Ds do not have to take any definite steps to remedy the problem)

Question 24

When can plc pay a dividend?

Answer 24

Net assets are greater than value of called up share capital and undistributable reserves.

If net assets are less than SC and UDR (or would become less after dividend is paid) cannot pay dividend.

Question 25

Dividend Procedure

Answer 25

1. Recommended by Board 2. Declared by SHs (same or less)

Question 26

Right to demand Poll vote

Answer 26

one or more holding at least 10% voting rights 2 or more with right to vote chairman Directors

Question 27

Effect of acting outside objects clause (ultra vires beyond powers in constitution)

Answer 27

Validity of agreement cannot be challegnged Civil consequences for Ds under s171

Question 28

Model articles and payment of shares on issue

Answer 28

All shares must be fully paid up on issue

Question 29

Short notice procedure

Answer 29

Majority in number (over 50%) and those in favour hold 90& or more voting rights (95% if plc)

Question 30

Can 25% shareholder block SRs?

Answer 30

No - as can still get 75%

Question 31

Requisition a GM

Answer 31

5% of voting rights

Question 32

SDLT on shares

Answer 32

Payable by Buyer Must be worth over £1,000 Amount: 0.5% on whole amount rounded up to nearest £5 NOT if transferred as a gift. Seller will pay CGT on disposal of chargeable gain,

Question 33

Effect of buy back on balance sheet if using distributable reserves

Answer 33

**Share capital**: *Reduce* by nominal value **Share premium account** (no change) **P&L**: *reduce* by entire amount **Capital Redemption Reserve**: create and value is *nominal value of shares* bought back **Net assets**: *reduce* by entire amount

Question 34

Voting on OR to buy-back shares from distributable reserves

Answer 34

SH who is having shares bought back is excluded from participating. Over 50% remaining shares must vote in favour.

Question 35

Financial Assistance

Answer 35

1. is it potentially unlawful? - if target is plc: unlawful from plc and all subsidiaries - if target is ltd: unlawful from plc subsidiaries only 2. does the amount involvedd reduce net assets to a material extent?

Question 36

Fixed term service contract length for SH approval

Answer 36

**OVER** 2 years

Question 37

Who does a director owe its duties to?

Answer 37

Company itself

Question 38

Written resolution time period

Answer 38

before end of 28 days beginning on circulation date

Question 39

Unfair Prejudice Claim

Answer 39

Conduct must be in repsect of company's affairs Conduct must be unfair AND prejudicial

Question 40

Notice requirements for GM

Answer 40

14 clear days (dont count day notice is given adn day of meeting itself)

Question 41

Deadline to submit accounts for ltd and plc

Answer 41

Ltd: 9 months after end of accounting reference date plc: 6 months

Question 42

Forms to changee regisstered office and accounting reference date

Answer 42

Registered office: AD01 Accounting Date: AA01

Question 43

Parntership default rules on profits, losses and withdrawing capital

Answer 43

Profits = share equally losses = share equally withdrawing capital: implied agreement entitled to withdraw original contribution Note: if partners share profits unequally because of an express or implied agreement, the losses will also be shared unequally unless there is agreement to the contrary

Question 44

treatment of interest on capital paid in a partnership

Answer 44

interest is NOT a deductible businesss expense (it is a preferential appropraition of profit). It should be paid first to teh partner entitled before the remaining profit is allocated.

Question 45

How to sue a partnership

Answer 45

1. Action against firm itself (partnership name) 2. Serve copy on any partner OR any person having control or management of business at the principle place of business

Question 46

When will a partnership be legally bound to a contract / deed

Answer 46

Contract: binding if entered into in firm's name by an authorised person (need not be a partner) Deed: each partner should execute personally (single partner cannot bind partnership to a deed)

Question 47

ranking of a partner's private and partnership creditors

Answer 47

partnership creditors rank equally with private creditors for private proprty. Private creditor can claim partnership property if private property is insufficient. But, they will rank after the partnership creditors' claims

Question 48

impact of partner retiring

Answer 48

Automatically dissolves paternship unless agreed otherwise. Retiring partner can call for assets to be realised and creditors paid off.

Question 49

Triggers for automatic dissolution of partnership

Answer 49

Retiring Bankruptcy of partner

Question 50

Novation agreement

Answer 50

On retirement, partner remains liable for existing debts. However, will not be liable for debt to specific creditor if enters novation agreement with creditor and all partners. There must be consideration, new partner or deed for it to be binding.

Question 51

resolution for winding up

Answer 51

SPECIAL

Question 52

Prescribed part fund calculation

Answer 52

Start with amount remaining after fixed, preferential paid (e.g. 100k) minus 50% of first 10k = -5k minus 20% of remainder (e.g. 90k) = -18k Amount avaiable for floating charge holders = 100k - 5k - 18k = 77k

Question 53

Payments made after bankruptcy petition is filed

Answer 53

ALL payments are void unless court approves it