BLP - time limits/voting rules Flashcards
1
Q
Override obligations under PA or partnership agreement
BLP Partnership
A
By unanimous consent
2
Q
Decision making in a partnership
BLP Partnership
A
Majority needed for “ordinary course of business decisions” & Unanimity needed for “change of nature” decisions)
3
Q
Voting on introduction & Expulsion of partners
Partnership
A
Incoming partners (no person may be introduced unless consent of all existing partners)
Expulsion (cannot be expelled by majority unless previously expressed this is possible)
4
Q
Subject to agreement, how remaining assets are distributed out after debts paid
BLP Partnership
A
Pay back original capital, then in accordance with PA 1890
5
Q
How do you incorporate an LLP
BLP Partnership
A
Two people + form LL IN01 at CH = Certificate of Incorporation
6
Q
Changes that must be reg at CH for LLP
BLP Partnership
A
Name, office, membership, charges, annual confirmation statement, accounts
7
Q
What does a designated member do and minimum required for LLP
BLP Partnership
A
Signs accounts, files docs at CH, acts for firm on winding up;
Minimum = 2
8
Q
Date of enforcement for CA 2006
BLP: Formation
A
1st October 2006
9
Q
How are BR passed (subject to Articles)
BLP: Formation
A
simple majority (50%+)
10
Q
S9 requirements filed to CH for incorporation by scratch
BLP: Formation
A
Articles (inc memorandum) + Form IN01 + fee = Certificate of Incorporation
11
Q
How to Alter Articles
BLP: Formation
A
SR of SH
12
Q
Changes to make after a shelf company incorporation
BLP: Formation
A
All SR must be filed; and amended articles along with any forms that CH requires (e.g. change of name form)
* AP01 (appointment of directors)
* AP03 (appointment of secretary)
* TM01 (removal of directors)
* TM02 (resignation of secretary)
* PSC02 and PSC07 (person of significant control (ceasing & entering)
* AD01 Change the registered office form
* NMO1 (change of name)
13
Q
How to make changes to a shelf corporation (voting)
incorporation
A
- SPECIAL RESOLUTION = Articles, name
- Share transfer form and share certificate given to new owners & BOARD RESOLUTION = to approve transfer of shares
- BOARD RESOLUTION = Registered Office
- Most other changes can be done by BOARD RESOLUTION
14
Q
Minimum directors for private/public company
BLP Directors
A
private = 1
public = 2
15
Q
Companies that must have a company secretary
BLP Directors
A
public
16
Q
apppointment of directors (according to model articles)
BLP Directors
A
Ordinary Resolution of shareholders or directors decision
17
Q
Resolution required for a directors service contract
BLP Directors
A
BR of Ds unless long-term contract (2 years) then SH approval needed by OR
18
Q
Removal of a director by SH
Directors
A
OR by SH for removal resolution (special notice 28 clear days)
19
Q
Removal of director by directors
Directors
A
not unless articles allow
20
Q
How a director declares an interest in a proposed transaction
Directors
A
At a board meeting or in writing before
21
Q
How a director with an ‘interest’ in a proposed transaction can be allowed to vote (MA)
Directors
A
Disapply the articles by OR
22
Q
when do you need to circulate a memorandum for transactions with directors
Directors
A
15 days before vote
23
Q
Substantial property transactions which require OR by SH (director/connected)
Directors
A
more than £100,000 or 10% of Net Asset Value of company and over £5,000
24
Q
Loss of office payments that don’t require SH approval
Directors
A
In goodwill, damages/settlement, pension, <£200
25
Loss of office payments to be made available to SH before OR passed
| DIrectors
15 clear days
26
Special notice for removal of director GM
| Shareholders
28 clear days (can't use written resolution)
27
When must notice be given by board to all SHs if removal res put on agenda
| Shareholders
14 clear days
28
Directors obligations on receipt of s303 request
| Shareholders
Given notice of GM within 21 days from s303, and held within 28 days of notice
29
When SHs can’t use a written resolution
| Shareholders
public companies; or the removal of a director/auditor
30
Minimum quorum for GM
| Shareholders
Two SH, unless there is only one
31
How Shareholders can ratify Directors conduct (e.g. negligence, breach etc)
| shareholders
Breach be ratified by OR unlawful acts can never be ratified
(person whose breach is being ratified and person connected to them cannot vote)
32
How to shorten notice for GM
| Shareholders
Can be called by: a majority in numbers of the members AND who, together hold shares with a nominal value of not less than 90% of the total nominal value of the shares - NEED BOTH MAJORITIES
GM is then held immediately following BM
33
Stages to bring a derivative claim
| shareholders
1. Prima Facie case to court & court approval
2. Evidence/views from neutral members
34
Share of issued shares to vote on varying class rights
| Equity finance
In writing 75% of that class or SR at GM of that class
35
SHs to block a resolution to change class rights
| equity finance
apply to court within 21 days & SHs holding 15% of relevant class (who did not vote in favour)
36
final dividend approval
| equity finance
recommended by directors and OR of SH
37
interim dividend approval
| Equity Finance
Directors have authority to distribute if distributable profits (MA 30)
38
Who private companies can issue shares to
| Equity Finance
Targeted investors, employees
39
Authority for directors to allot if more than one type of share in existence
| equity finance
OR by SH / Article provision
40
How to disapply preemption rights
| Equity finance
SR by SH
41
Period given to SHs to act on pre-emption rights
| Equity finance
14 days
42
Steps after grant of pre-emption rights for allotting
| Equity Finance
* Amended Articles/SRs within 15 days
* Register SH01 within one month
* changes of PSC if necessary
* update company registers within 2 months
* issues share certificates within 2 months
43
what resolution is needed to approve an 'off-market' share purchase
| Equity Finance
OR by SH
44
when do the display terms of buyback contract before GM need to be available
| equity finance
contract must be available for inspection at the company’s registered office for at least 15 days prior to and at GM
(or circulated if WR 90% of SH agree)
45
what is needed for approval for buyback from distributable profits or fresh issue of shares
| equity finance
SH approve by OR
46
what is needed for approval for buyback from capital (private only)
| equity finance
OR by SH – authorise redemption and contract terms
SR by SH – authorise declaration of solvency and auditors’ report (within 1 week of statement of solvency signed)
Payment out of capital 5-7 weeks after SR
47
notice of cancellation & statement of capital filed at CH after buyback
| equity finance
28 days
48
How long after buyback must the company have a copy of the buyback contract
| equity finance
10 years
49
how/when to register a charge at CH
| Debt Finance
Within 21 days using form MR01 (+ fee + debenture) (+ at LR if land)
50
when do you have to register loans/personal agreements at CH
| debt finance
NEVER !
51
what is the date used to rank fixed and floating charges
| debt finance
date of creation (CH) not including 21 days taken to register
52
what is the date used to rank land charges
| debt finance
date of registration (LR)
53
what are crytallisation events (for floating charges)
| debt finance
insolvency, ceases to trade, receiver appointed
54
What is the personal allowance
| income tax
£12,570 (reduced by £1 for every £2 over new income £100,000 and no benefit over £125,140)
55
what is the personal savings allowance
| income tax
basic rate = £1,000 SI at 0%
higher rate = £500 SI at 0%
Additional rate = none
56
what are the relevant rates for income tax
| income tax
BASIC (20%) = £0 - £37,700
HIGHER (40%) = £37,701 - £125,140
ADDITIONAL RATE (45%) = over £125,140
57
what is the dividend allowance
| income tax
£500 tax free allowance
58
Annual exemption for CGT
| CGT
£3,000
59
How many years can capital losses be carried forward
| CGT
Indefinitely
60
Higher/additional rate for CGT
| CGT
20%
61
Basic rate
| CGT
10% for unused basic, 20% otherwise
(10% if BPR/IR)
62
Time restrictions on purchase of new asset for rollover relief
| CGT
12 months before / 3 months after sale of old asset
63
Qualifying assets for BADR (Business Asset Disposal Relief)
| CGT
1. Assets from a business that used to trade
* Owned for at least 2 years before it ceased to trade;
* Must have been used in the business
* Disposed of within 3 years of ceasing
2. Shares in a trading company/co that used to trade
* Held for at least 2 years
* Been an officer/employee of the company who holds at least 5% of the ordinary voting shares and is entitled to at least 5% of the profits available for distribution and 5% of the net assets on a winding up for at least 2 years
64
Lifetime allowance for BADR
| CGT
1 million (at 10%)
65
Lifetime allowance of investor relief
| CGT
£10 million
66
Qualifying IR shares
| CGT
* Fully paid for ordinary shares issued after March 2016
* trading co/holding co of trading co
* unlisted at time of issue
* held for 3 years
* Not O/E/of a connected co
67
Annual Investment Allowance (capital allowance)
| Corp Tax
Deduct 100% expenditure up to £1m on YEAR of purchase [normal capital allowance of 18% can be applied to any expenditure above that £1m amount]
In 2023 = companies allowed to deduct 100% of the cost of new and unused plant/machinery (uncapped amount) = full expensing
68
Calculating income profits
| Corp Tax
Income receipts
LESS tax deductible expenditure
LESS capital allowances (AIA + 18%)
LESS trading losses
69
Calculating chargeable gains
| Corp Tax
Sale proceeds
LESS allowable expenditure (nb not maintaining/repairing)
LESS capital/trading losses
70
Deductible expenditure for income purposes (calculating income profits)
| Corp Tax
Wholly and exclusively incurred for the purposes of the trade, not prohib by statute (business entertainment/doubtful debts), be of an income nature (recurring payments)
[NOT dividends]
71
Capital allowances reduction on Plant & Machinery
| Corp Tax
18%
72
Payment of corp tax TTP £1,500,000 or less
| Corp Tax
9 months and 1 day from end of accounting period
73
Payment of corp tax TTP >£1,500,000
| Corp Tax
4 instalments in next 2 years
74
Time HMRC has to investigate corporation tax underpayment
| Corp Tax
6 years
75
Rates of supply (VAT)
| VAT
Standard – 20% (assume most)
Reduced – 5% (smoking cessation products, childrens car seats, domestic heating/power & mobility aids)
Zero-rated – 0% (food, sewerage, water, public transport, books for the blind, books/newspapers, new houses/construction, childrens clothing)
76
Close company definition
| Anti-avoidance tax
5 or fewer participators (SH/cred) or any no of participators who are also directors (control = more than 50% issued share capital or assets on winding up)
Exclusions: listed on SE / wholly owned sub of non-close company
77
Taxation effect of loan to a participator, for the participator from CC
| Tax anti-avoidance
If written off, as a dividend for income tax
If fully repaid, no effect
78
Taxation effect of loan to a participator, for the company from CC
| Anti avoidance - tax
Corporation tax on the loan, paid within 9 months + 1 day of end of acc period
Can claim refund if paid back
79
CC wont be deemed to have made a loan if ...
| tax anti-avoidance
Ordinary course of money lending business, form of credit normally given by company, loan to borrower which doesn’t exceed £15,000 in aggregate (borrower works full time for co and no material interest (5%) in CC)
80
when private companies must file accounts
| Accounts
within 9 months of end of accounting period
81
when public companies must file accounts
| ACCOUNTS
within 6 months of end of accounting period
82
How do SH confirm directors proposed final dividend
| accounts
OR
83
what is the accounting reference period that companies use (subject to change)
| accounts
year from end of month of incorporation
84
Tests of insolvency
| Insolvency
* Cash flow
* balance sheet
* £750 demand for debt
* can’t satisfy enforcement judgement
85
How long a pre-insolvency moratorium lasts
| Insolvency
20 business days, extended by directors further 20 days (extended by max 1 year with creditors/court consent)
86
Requirements for Pre-Insolvency Moratorium
| Insolvency
File at court: statement unlikely to pay debts + ‘monitor’ statement from licenced insolv practitioner that a PIM will rescue the company
87
Debts exempt from pre-insolvency moratorium
| Insolvency
Must pay moratorium debts (but not pre-moratorium debts except rent/supplies/wages/salary/redundancy payments/loans to a bank)
88
Set up of CVA
| Insolvency
1. directors draft CVA + appoint nominee
2. submit CVA + st of company affairs to nominee
3. nominee reports to court within 28 days to decide if creditors/SHs can vote
4. creditors have 14 days to vote
5. SHs vote in 5 days from cred vote
89
Requirements for approval of CVA
| Insolvency
* Creditors: 75% in value of creditors (excluding secured) + majority in value of unconnected creditors (i.e. NOT related companies/directors) (allow 14 days)
* Members: simple majority within 5 days of creditor vote
90
Time limit for challenging CVA
| insolvency
28 days on unfair prejudice
91
Creditors bound by CVA
| Insolvency
* All unsecured creditors
* Secured/preferential who consented
92
Creditors bound by Restructuring Plan
| Insolvency
All creditors
93
Approval required for Restructuring Plan
| Insolvency
75% each class (cross-class clamp down imposed by non-approving classes if court thinks that they would be better off than liquidation)
94
When does administration terminate automatically
| Administration
after 12 months (unless extended)
95
Out of court administration procedure
| Administration
PROCEDURE: company/directors
* File Notice of Intention & serve QFCH
* Then wait 5 business days
* Not less than 10 business days later from filing NOI, appoint and file notice of appointment
* Administrator appointed
PROCEDURE: QFCH (1st ranking) (streamlined out-of-court procedure)
* Appoint and file notice of appointment
* Administrator appointed
96
Automatic dissolution after registrar receives notice of complete winding up
| Liquidation
3 months
97
MVL (Members VL) process
| Liquidation
1. Director’s declaration of solvency
2. SR to approve MVL
3. OR appoint liquidator, giving notice to any qualifying floating charge holder
Nb only for solvent companies
98
Order of priority
| Liquidation
1. Liquidator’s costs inc preserving assets
2. Fixed charge creditors – only part of security released from sale of fixed asset
3. Preferential creditors (wages etc)
4. Prescribed part (set aside for unsecured creditors)
5. Floating charge creditors
6. Unsecured creditors (only capital paid back) (rank pari passu)
7. Interest on unsecured and preferential debts
8. SHs
99
Voidable transactions at undervalue
(criteria)
| Voidable transaction
2 years prior to insolvency + insolvent at the time or as a result (presumed with connected person)
100
Defence of transactions at undervalue
| Voidable transactions
Good faith / reasonable belief of benefitting company
101
Voidable preferences
| Voidable transactions
6 months prior to insolvency (unconnected person) / 2 years prior to insolvency (connected person) + co insolvent at the time or as a result + influenced by a desire to prefer creditor (assumed with connected person)
102
Avoidance of floating charges (ie secure a floating charge to secure an existing charge for no consideration)
| Voidable transactions
1 year prior to insolvency (unconnected person) / 2 years (connected person) + company insolvent at the time or as a result of - unless connected person
103
Transactions defrauding creditors
| Voidable transactions
Intention to put assets beyond reach of creditors (no time limit or need to be insolvent)
104
Typical timeframe of IVA (to repay debts)
| Individual insolvency
5 years
105
Creditors meeting takes place
| Individual Insolvency
Within 14 days of court granting interim order
106
Approval needed at creditors meeting
| Individual Insolvency
75% to accept proposals
107
People who can make a bankruptcy petition to court
| Individual insolvency
Unsecured creditor (owed at least £5,000) or supervisor/creditors from failed IVA
108
Automatic discharge from bankruptcy order
| Individual Insolvency
1 year from order if complied with duties
