Director, Shareholders and Company Decision Making

Question 1

Executive directors have what

Answer 1

service contract, day to day running of the company, employment contract

Question 2

Non-Executive directors have what

Answer 2

no service contract, no day to day running, no employment contract

Question 3

things needed to be a director:

Answer 3

• 16+
• Consent through writing
• ## Can live outside of the UK

Not:
- Not bankrupt or mentally incapable
- No fraud/dishonesty charges
- Not ongoing insolvency
- Not if articles say conflict of interest
- Not disqualified
- AP01

Question 4

What does a Bushell v Faith clause do

Answer 4

Allows a person who is a shareholder and a director to have extra voting rights on a resolution to remove them from office. It makes it more difficult or impossible to remove that director by an ordinary resolution.

Question 5

Fixed term contract 2+ years the TERM MUST BE APPROVED BY

Answer 5

Ordinary Resolution

Question 6

Procedure for ‘The Removal of a Director’

Answer 6

• Majority vote at board meeting [if the articles allow]

or

• Ordinary resolution at least 28 days notice of the meeting, no written resolution, director given copy of notice and can make representations for their case, get rid of Bushell v Faith clause. TM01

Question 7

Appointment of a Director

Answer 7

Ordinary Res or Board Res [articles no need to change]

Question 8

After removing a director, what should be sent to the Companies house

Answer 8

JUST FORM TM01 within 14 days

Question 9

A director has a duty to avoid conflicts of interest. Does this duty apply even after the director ceases to be a director?

Answer 9

Yes if it is regarding any information/opportunities he became aware of when he was director.

Question 10

If a company wants something done as ‘soon as possible’ what is the best way to resolution?

Answer 10

a written resolution

Question 11

A director has a duty not to accept 3rd party benefits due to him being a director, or his conduct as a director - what are the exceptions?

Answer 11

Where there are provisions permitting it within the articles
Where the shareholders approve

Question 12

Director has an interest in a proposed transaction [s177] he must…

Answer 12

Declare the nature and extent
Failure - breach of duty
Cannot vote on the transaction or take part in quorum unless this has been dissaplied by an ordinary resolution

Question 13

When is an exception where a director can vote when they have an interest in a proposed transaction?

Answer 13

Where this has been dissaplied by an ordinary resolution
When it cannot be reasonably regarded as being a conflict of interest
If a specified exemption applies

Question 14

What if there is an equal number of votes for and against a resolution

Answer 14

The negative view will prevail unless the Chairman has a casting vote.
It counts as the chairman having one extra vote.

Question 15

Are there casting votes at general meetings

Answer 15

No no casting vote exists unless specifically provided for ( check Model Articles give one).

Question 16

How long are MINUTES kept after board meetings

Answer 16

10 years baby !

Question 17

3 things that make up a substantial property transaction:

Answer 17

• Director or a person connected to a director
• Acquires a NON CASH asset
• Over 100,000 or exceeds 10% of company net value and is over 5k

Question 18

Resolution for a SPT:

Answer 18

Ordinary

Question 19

Who is a NOT a connected person:

Answer 19

brothers, sisters, grandparents, grandchildren, uncles, aunts and nieces

jazz, phoi, nanie, sienna

Question 20

Who is a connected person

Answer 20

Connected persons include the following members of a director’ family:

their husband, wife or civil partner or partner with whom they have an ‘enduring relationship’, parents, children (and step-children) (ss.252 and 253 CA 2006).

Question 21

Loan of more than 10,000 to director must be

Answer 21

approved by Ordinary Resolution

Question 22

When a director loses office, they can be entitled to a payment of £200, but anything over £200 must be approved by:

Answer 22

Ordinary Resolution

Question 23

What is a shareholders liability limited to

Answer 23

Paying the agreed price for his shares

Question 24

When is a derivitive claim bought?

Answer 24

By a shareholder when there has been negligence, omission against the COMPANY.
2 hearings, firstly a preliminary one then a full hearing.

o Things that can stop the claim: company approved directors actions, shareholder not acting in best interests of the company, another lawsuit already happening
o Shareholder pays costs if courts reject
o Company pays costs if theirs lose

Question 25

When is an unfair prujudice claim bought?

Answer 25

A shareholder feels the companies affairs are carried out in a manner which is prejudicial. o Minority shareholders can apply if they feel unfairly prejudiced for being small o Must cause harm to one or more shareholders and be unfair o Remedies to pay the shares back, restrictions on the companies, high threshold

Question 26

Pass what resolution to authorise a 'buyback' contract:

Answer 26

Ordinary

Question 27

Demand a poll vote:

Answer 27

10%

Question 28

Short notice of meetings

Answer 28

90% priv 95% pub

Question 29

Block a special res

Answer 29

25%

Question 30

Circulate a written res

Answer 30

5%

Question 31

2 ways a shareholder's meeting can be called

Answer 31

Directors call a general meeting or Members with 5% of the paid up share capital CALL a general meeting and then directors have to within 21 days.

Question 32

Notice of a board meeting

Answer 32

To every director REASONABLE NOTICE of the time, date and subject matter and where the meeting is. Need not be in writing.

Question 33

Notice of a general meeting

Answer 33

14 Clear days to every shareholder of the time, date, place and nature of business. State the text of the resolution. Right to proxy.

Question 34

Notice of general meeting by email

Answer 34

Add 48 hours onto 14 days

Question 35

Time limit for sending back a written resolution

Answer 35

Within 28 days of the circulation date

Question 36

What resolution should be applied to dissaply premption rights

Answer 36

Special resolution

Question 37

Signing a contract formalities:

Answer 37

Signed by a company or a person acting under its authority express or implied

Question 38

Regarding formalities for appointing and removing a director, what is the only thing that is needed

Answer 38

Legit only the notice of the appointment of director

Question 39

Where are stock transfer forms registered to

Answer 39

the registar of companies

Question 40

Resolution to change the companies name

Answer 40

Special resolution Sent to Registrar Immediately takes effect

Question 41

Amount which falls under the exception for expenditure on company buisness for the purpose of enabling a director to properly perform his duties

Answer 41

under 50,000

Question 42

Which resolution needs to be passed to ratify a breach

Answer 42

Ordinary

Question 43

If you enter into a substantial property agreement without the correct resolution what can happen?

Answer 43

Be fined

Question 44

Do shareholders need to account for their personal interests in a general meeting vote

Answer 44

No

Question 45

What can be quite difficult as a minority shareholder, to bring an unfair prejudice claim?

Answer 45

Finding enough evidence

Question 46

Special resolution must be filed within how many days?

Answer 46

15 days

Question 47

Can written resolutions be used to remove a director ?

Answer 47

NO

Question 48

De fact director

Answer 48

Acts as if appointed but not

Question 49

Shadow director

Answer 49

Directors of company accustoned to act in accordance with their instructions but not appointed

Question 50

Can be disqualified within ...

Answer 50

2-15 years

Question 51

Must file accounts every year at Companies House except small companies. How long do Private and Public have to...

Answer 51

Priv - 9 months from end of accounting ref period Pub - 6 months Newly incorporated - 3 months

Question 52

Charge,s, what take priority?

Answer 52

fixed charges take priority over floating. If two fixed/floating on same asset, priority is awarded on date of creation not registration. Floating can have a negative pledge to alter order of priority (prohibits C creating later charges with priority over floating without charger’s permission).

Question 53

Who are dividends reccomend by and what res?

Answer 53

Ordinary resolution Reccomended by directors

Question 54

What is a poll vote

Answer 54

show of hands only those whose hands are up count, if people abstain then they dont count

Question 55

For service contracts of a director, if it states 'a 5 year contract with 6 months notice' what is needed to pass it

Answer 55

No shareholder approval - just a board meeting. As the guaranteed term is 6 months which is under 2 years.

Question 56

Does The duty to avoid conflicts of interest does apply to conflicts which arise in respect of transactions with the company

Answer 56

No .The conflict here is in respect of a transaction with the company (the payment of a percentage of profits by the company to the restaurant owner). Does not apply to wife owning a restaurant and receiving money from the company.

Question 57

Does a conflict of interest apply to limited corporate hospitality

Answer 57

No

Question 58

For a derivative claim - when will the courts permission not be granted

Answer 58

If it can be easily ratified by a shareholders resolution

Question 59

An unfair prejudice claim is based on a what test?

Answer 59

objective

Question 60

Private or Public Company

Answer 60

Assume Private Public are listed on the stock exchange/offer shares to the public.