Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

BLP > Companies > Flashcards

Companies Flashcards

1
Q

Who must they be registered with?

A

Registrar of Companies at Companies House

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is a company limited by guarantee?

A

Members pay fixed, guaranteed amount in event of company being wound up.

Used for charities where there is no need for members to make large capital contributions for the business to run.

No shareholders.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is a company limited by shares?

A

Members have no personal liability beyond the amount they agreed to pay for their shares.

Can either be private limited (Ltd) or public limited (Plc)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is the nominal share capital of a PLC?

A

£50,000

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the people who start a company known as?

A

Promoters

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What duty to promoters owe?

A

A fiduciary duty to the newly incorporated company

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is a memorandum of association?

A

Statement authenticated/signed by persons wishing to become members of the company

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Who creates the memorandum of association?

A

Promoter

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Who must the memorandum of association be delivered to?

A

The Registrar along with the application for registration

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Is a promoter liable for a pre-incorporation contract? What legislation governs this?

A

Yes

The Companies Act 2006

They remain liable even after the company is formed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What are the four ways a promoter can protect themselves from personal liability for a pre-incorporation contract?

A

Execute the contract in draft

Enter into a novation agreement after the company is incorporated

Enter into a contract with the incorporated company assigning the benefit to it in exchange for an indemnity from any liability

Enter into the contract using a shelf company

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is the issue with a shelf company?

A

They will likely have been incorporated using the model articles so it will not be suitable for a company requiring bespoke articles of association

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What must be included on the application for registration?

A

The proposed name of the company

The location of the registered office (must be in the jurisdiction in which the business is located)

Details of the company’s business activity and SIC (Standard Industrial Classification) code;

Whether the company will be limited by shares or guarantee;

Whether the company is private or public;

Details of subscribers;

A statement of capital and initial shareholdings;

A statement of the proposed officers, including their residential address, and the company secretary—(required for public companies but not for private companies)
Details of persons with significant control;

A statement of compliance with the terms of the Companies Act 2006; and

Payment of the relevant fee

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What rules must the promoter comply with when selecting a name?

A

It must not be the same as, or essentially the same as, the name of an already incorporated company;

It must end in Limited/Ltd or Public Limited Company/Plc, as applicable;

It cannot be a name that is deemed offensive;

Approval required for a name that suggests any connection to Government or local authority; and

Approval is required for a name that contains any sensitive words (auditor, chartered, medical centre etc)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

How can a company change its name?

A

By special resolution (or by method provided for by articles)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Once a name change is approved what must the company do?

A

Forward a copy of the resolution to the Registrar and give them notice of the name change

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

If a company is limited by shares, what must the application for registration include?

A

Statement of the total number of shares of the company to be taken by the subscribers of the Memorandum of Association;

The aggregate nominal value of those shares;

If the shares are to be divided into classes with varying rights, a description of those classes and rights; and

The amount that will be paid by shareholders and any amount left unpaid for the shares

18
Q

What is a company’s constitution?

A

Its articles of association plus any resolutions or agreements adopted by the members to amend its articles of association

19
Q

What is covered in the articles of association?

A

Directors’ meetings and decision making;

Appointment and removal of directors;

Share capital (including issuing, allotting, and transferring shares);

Rights attached to shares, including voting and dividends; and

Shareholder meetings (including for example, notice and quorum requirements)

20
Q

What are the company’s objects?

A

The purpose and range of activities for which the company is carrying out

21
Q

Do directors have to adhere to a company’s objects?

A

Yes

22
Q

What are the two possible outcomes of a director failing to adhere to a company’s objects?

A

an injunction preventing the restricted action if it has not been already carried out

an equitable action by the company for damage caused

23
Q

Is something carried out beyond the scope of its objects valid?

A

Yes

24
Q

Do the model articles contain any restriction on objects?

A

No

25
Q

What is the effect of unrestricted objects?

A

The company is free to carry on commercial activity of any kind

26
Q

What is the legal effect of the articles of association?

A

They form a contract between the company and the shareholders, and between the shareholders and each other shareholder

27
Q

When can shareholders enforce the articles of association?

A

Only if it relates to membership rights

28
Q

What is a shareholders agreement?

A

Private contractual agreement between shareholders who have signed up to it

29
Q

How can a company alter its articles of association?

A

By special resolution

30
Q

What is entrenchment?

A

Where a company can elect to make certain provisions harder to change by requiring a more onerous process than a special resolution

31
Q

Can articles of association require a shareholder to increase their liability for the company?

A

No

32
Q

What is an ordinary shareholder resolution?

A

50.1% +

33
Q

What is a special resolution?

A

75% +

34
Q

Who must be given notification of an entrenched provision?

A

The Registrar

35
Q

What if a shareholder disagrees with an alteration (approved by shareholders)?

A

Make an application to court if decision is not reasonably in the best interests of the company

36
Q

Is an alteration that adversely impacts minority shareholders permitted?

A

Yes - provided it is made in good faith and in the interests of the company

Court will examine whether it unfairly discriminates against some shareholders over others

37
Q

What are the six advantages of distinct legal personality?

A

Owns property in its own name;

Enter into contracts in its own name;

Can borrow money and grant security in its own name;

Is taxed separately from its members;

Can sue (and be sued) in its own name; and

Perpetual succession

38
Q

What is the veil of incorporation?

A

No personal liability for members

39
Q

When can the veil of incorporation be lifted?

A

Fraud

Where the company was formed to avoid carrying out an existing obligation

40
Q

What happens if a director continues to trade whilst knowing that the company is insolvent?

A

They may be charged with fraudulent trading - criminal offence

They may be sued for wrongful trading.

Potential fines

41
Q

What happens if a PLC does not have a valid trading certificate?

A

Directors can be held personally liable for any losses

BLP (9 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions