BLP: Formation of a Company Flashcards
(40 cards)
What constitutional documents does a company incorporated under CA 2006 have?
Only the Articles of Association form the company’s constitution (s18 CA 2006); the Memorandum is required only for registration, not as part of the ongoing constitution.
How did the Memorandum function under CA 1985, and how is it treated under CA 2006 for older companies?
Under CA 1985, the Memorandum (including objects) formed part of the constitution. Under CA 2006, the Memorandum is only a registration formality, but any pre-2006 Memorandum provisions (e.g., objects) continue as part of the Articles (s28 CA 2006).
What default objects clause applies to companies formed under CA 2006?
CA 2006 companies have unrestricted objects unless the Articles specifically restrict them (s31 CA 2006); the ultra vires rule only applies if an objects clause is in the Articles.
When do Model Articles apply to a company, and how can they be modified?
If no Articles are registered, the relevant Model Articles (MA) apply by default (s20 CA 2006). A company may adopt MA, adopt amended MA, or draft bespoke Articles; any amendments to MA require a special resolution.
By what process can a company amend its Articles, and what requirement must be satisfied?
Articles may be altered by special resolution (≥75% of votes) under s21 CA 2006. Any amendment must be made bona fide in the interests of the company as a whole.
What is the legal effect of the Articles on the company and its members?
Articles bind the company and each member as if covenants were entered into (contract) between company and members, and create rights enforceable against the company in respect of membership (s33 CA 2006).
Why might a shareholder need a separate shareholders’ agreement despite the Articles’ contractual effect?
Because rights between members are only enforceable through the company, not directly against other members. A shareholders’ agreement creates direct contractual obligations among shareholders.
What documents must be delivered to Companies House to incorporate a new company from scratch?
To incorporate: a copy of the Memorandum (s8 CA 2006 format), Articles (if not using MA), the incorporation fee, and Form IN01 containing company name, registered office, private/public status, statement of capital or guarantee, officers and PSC details, statement of compliance (s13), and statement of lawful purpose (ECCTA 2024).
When does a company become a legal entity, and what does the Certificate of Incorporation include?
A company becomes a legal person on issue of the Certificate of Incorporation (s16 CA 2006). The Certificate shows the company’s name, registration number, and date of incorporation (s15 CA 2006).
What is an “appropriate address” for a company’s registered office under ECCTA amendments?
An address where a document delivered by hand or post would be expected to be brought to the attention of someone acting on behalf of the company, capable of recording delivery (no PO Box) (s9(5)(aa) ECCTA 2024).
What steps are involved in converting a shelf company for client use?
Change name by special resolution and Form NM01; change registered office by Form AD01; consider amending Articles by special resolution and filing; transfer shares from original subscribers; appoint new directors via AP01 and secretary via AP03; and resign original directors/secretary via TM01/TM02 in correct order.
List five legal restrictions on a company name under CA 2006 (including ECCTA) that must be checked before registration.
Name must not be offensive (s53(b)); must end with “Ltd” or “Limited” for private companies (s59); must not be identical to an existing name (s66); must not suggest government affiliation (s54) or include sensitive words without approval (s55); may not contain misleading indicators of activity (s76) or facilitation of crime (s76A); may not be a computer code (s57A) or already directed to change (s57B–C); may not suggest foreign government connection (s56A).
What decisions must the board consider immediately after formation of a new company?
Elect a chair (consider casting vote under MA13); decide accounting reference date (default last day of incorporation month, can change via AA01); appoint an auditor if required (s394 CA 2006); register for Corporation Tax, VAT, PAYE/NI; consider preparing a shareholders’ agreement.
Who is liable for a contract purportedly entered into on behalf of a company before its incorporation?
The promoter (person purporting to act) is personally liable for pre-incorporation contracts (s51 CA 2006), since the company has no capacity until incorporation and cannot ratify such contracts.
How are board resolutions passed, and what quorum and voting thresholds apply?
Board resolutions are passed at board meetings by a simple majority of directors present (MA7(1)), unless Articles require unanimity. Quorum is two directors (MA11(2)), unless Articles specify otherwise. The chair may have a casting vote (MA13).
What are the two types of shareholder resolutions and their required majorities?
Ordinary Resolutions require a simple majority (>50%) of votes cast (s282 CA 2006) and can be passed by show of hands or poll at a GM or in writing (private companies). Special Resolutions require at least 75% of votes cast (s283 CA 2006) and must be passed at a GM or by written resolution.
Explain the difference between show of hands and poll voting at a GM. How does each count votes?
Show of hands: one vote per member present, regardless of shareholding (s284(2)). Poll: one vote per share held by each member (s284(3)). Poll favors shareholders with larger holdings; show of hands gives each member equal weight.
When and how can a shareholder demand a poll vote at a GM?
Any member entitled to vote on a resolution can demand a poll before or after the show of hands (s321 CA 2006), though Articles may relax conditions. A poll tallies votes per share rather than per member.
What restrictions apply to passing certain resolutions by written resolution?
Only private companies may use written resolutions (s281 CA 2006). Removal of a director under s168 and removal of an auditor under s510 cannot be passed by written resolution (s288(2)).
What quorum and notice requirements apply to General Meetings for private companies?
Quorum is two shareholders (one for a single-member company) (s318 CA 2006). Notice must be at least 14 clear days before the GM (s307 CA 2006), excluding day of meeting and day notice is given (s360 CA 2006), and specifying business in sufficient detail (s311).
How can a private company call a GM on short notice, and what thresholds must be met?
A GM may be called on shorter notice if agreed by a majority in number of shareholders representing at least 90% of voting rights entitled to attend and vote (s307(5) CA 2006). Articles may increase threshold to 95%.
Outline the ‘GM sandwich’ process for holding a full-notice GM. What meetings and resolutions are involved?
BM1: directors approve and authorize notice for GM; GM: shareholders vote; BM2: directors record outcome and authorize post-meeting filings; PMMs: file special resolutions and updated registers at Companies House, update internal minutes and statutory books.
What steps constitute Post-Meeting Matters (PMMs) after a GM?
Internal: keep minutes (10 years), update statutory registers (members, directors, PSC, etc.). Company House filings: file special resolution (SR), amended Articles, and any other required forms (e.g., Change of Name). Maintain record-keeping at registered office.
What are the key procedural considerations when convening any company meeting?
Who transacts business (board or shareholders); how and by whom meeting is called; notice period and content; quorum requirements; agenda and sufficient description of business (s311); voting entitlements and method; and post-meeting documentation and filings.
