Company Formation Flashcards
Procedures around forming a company
What effect do company memorandum have?
Since the 2006 Act, the memorandum is of little importance. Pre-2006, the memorandum was a key constitutional document of a company and restricted the objects of the company. Any act outside the object was ultra vires. These restricted objects are still enforce unless specifically amended by the articles.
What is meant by the legality test in relation to the Articles of Association of a company?
The articles must comply with the minimum provisions of the Company Act. The articles can insist on more onerous conditions than the CA.
What form of articles can a company have?
Three options:
- model articles
- amended articles
- tailor-made articles
How are articles amended?
Amending articles requires a special resolution and any amendment must be in the bone fide interest of the company.
What is the legal effect of the articles?
The articles evidence a contract between the company and its members in their capacity as members and with respect to their rights and obligations as members.
Are the articles binding between members?
Generally thought no. If shareholders want to enforce rights between themselves they should enter into a shareholder’s agreement.
What are the two options for someone wanting to set-up a company?
They can incorporate a company from scratch or convert a shelf company
How do you incorporate a company from scratch?
You must file a memorandum, form IN01, fee and articles (if not using the MAs) with companies house.
When does a company become a legal entity?
A company become a legal entity from the date on which the certificate of incorporation is issued by Companies House.
What needs to be changed if using a shelf company?
Name, registered office, articles (potentially), members, directors and company secretary (if using one)
When does a company’s change of name become effective?
When the new certificate of incorporation is issued.
What considerations are there in relation to a company’s name?
- must not be offensive
- must end in limited/ltd (if private company)
- must not be the same as another company
- must not imply a connection with government or public authority
- must not contain sensitive words
What post-incorporation steps are there?
- appointing a chair (if required)
- accounting reference date
- appointing an auditor
- registering for tax
Can a company enter into contract pre-incorporation? What are the consequences if does?
No, it does not yet have capacity to enter into contracts.
Any person purporting to act on for the company pre-incorporation, will be personally liable for any contracts entered into.
