Formation of a company Flashcards
(306 cards)
1
Q
What is the key statute governing company law?
A
Companies Act 2006
2
Q
When did the Companies Act 2006 come into force?
A
1 October 2009
3
Q
What act governed companies before the Companies Act 2006?
A
Companies Act 1985
4
Q
What two constitutional documents did the Companies Act 1985 require?
A
Articles of Association and the Memorandum
5
Q
Under what section of the Companies Act 2006 does the memorandum no longer form part of the constitution?
A
Section 17
6
Q
What is the memorandum now required for under the Companies Act 2006?
A
procedure to register a company
7
Q
What does the memorandum under the Companies Act 2006 amount to?
A
declaration of wish to form a company and become members
8
Q
Under which act did the memorandum form part of the constitution?
A
Companies Act 1985
9
Q
What clause did the memorandum under the Companies Act 1985 include?
A
objects clause
10
Q
What term described acting outside the companys purpose?
A
ultra vires
11
Q
What type of objects do companies formed under the Companies Act 2006 have?
A
unrestricted
12
Q
Under what section of the Companies Act 2006 are objects unrestricted?
A
Section 31
13
Q
When does the ultra vires rule apply to a 2006 Act company?
A
if an objects clause is in its Articles
14
Q
Under what section of the Companies Act 2006 are memorandum provisions of older companies treated as Articles provisions?
A
Section 28
15
Q
What continues in force for older companies under the Companies Act 2006?
A
objects clause
16
Q
What does the objects clause of an older company operate as?
A
limitation on capacity
17
Q
How can the objects clause of an older company be removed?
A
amending the Articles
18
Q
What must all companies have under the Companies Act 2006?
A
articles of association
19
Q
Under the Companies Act 2006 what is the main constitutional document?
A
Articles
20
Q
What is the purpose of the Articles?
A
regulate relationships between shareholders directors and company
21
Q
What do Articles often include regarding directors at meetings?
A
quorum and decision making
22
Q
What do Articles often specify regarding directors?
A
method of appointment powers
23
Q
What do Articles often detail about internal governance?
A
how board meetings are conducted
24
Q
What might Articles specify about ownership?
A
special rights attaching to shares
25
What do Articles often cover regarding member meetings?
how shareholder meetings are conducted
26
What do Articles often regulate regarding ownership transfer?
how shareholders may transfer shares
27
How must a companys Articles be interpreted?
in light of relevant legislation
28
What test must the Articles comply with?
Legality Test
29
Can Articles impose more onerous procedures than the Companies Act 2006?
Yes
30
What is the minimum number of directors for a private company under the Companies Act 2006 Section 154(1)?
one
31
Can Articles require a higher number of directors?
Yes
32
What type of Companies Act 2006 provisions override the Articles?
mandatory provisions
33
What right under Companies Act 2006 Section 321 cannot be removed by Articles?
right to demand a poll vote at a GM
34
What powers are available to companies by default unless Articles provide otherwise?
power to issue redeemable shares
35
What should always be checked alongside legislation?
clients Articles
36
How many choices does a company effectively have for the form of its Articles?
three
37
What is a standard form of Articles?
Model Articles
38
What was the default Articles for companies under the Companies Act 1985 known as?
Table A
39
What happens if a new company does not register Articles?
relevant Model Articles constitute them
40
What do many companies choose to do with Model Articles?
adopt them with exclusions or modifications
41
What is the third option for the form of Articles?
tailor made Articles
42
What is a disadvantage of tailor made Articles?
time consuming and costly
43
How can a company alter its Articles after adoption?
by special resolution
44
Under what section of the Companies Act 2006 can Articles be altered?
Section 21(1)
45
What is the basic rule for valid alteration of Articles?
bona fide in the interests of the company as a whole
46
What does Section 22 of the Companies Act 2006 permit regarding Articles?
entrenchment of specific provisions
47
Is entrenchment of Articles common in practice?
relatively rarely
48
What is an entrenched provision of Articles?
can only be amended or repealed with specific conditions or more restrictive procedures
49
How can entrenched Articles always be amended?
agreement of all members or court order
50
Under what section of the Companies Act 2006 is the legal effect of Articles set out?
Section 33(1)
51
What do the provisions in the Articles bind the company and its members as?
covenants to observe those provisions
52
Who is bound by the companys Articles?
the company and its members
53
What type of contract do the Articles evidence generally?
contract between company and members in their capacity as members
54
Regarding what rights and obligations do Articles evidence a contract?
as members
55
How do courts generally view members enforcing provisions against other members through Articles?
only through the company itself
56
What should members seeking to enforce rights against other members enter into?
shareholders agreement
57
What type of agreement is a shareholders agreement?
private agreement between shareholders
58
How is a shareholders agreement enforceable?
as a contract between the members
59
What have courts been willing to grant to prevent companies infringing members rights in breach of Articles?
injunction
60
In what capacity are members obliged to comply with the Articles to the company?
acting as a member
61
Can a member enforce rights not relevant to their capacity as a member against the company through Articles?
No
62
What is a right enforceable by members under Companies Act 2006 Section 33?
right to vote
63
What is another right enforceable by members under Companies Act 2006 Section 33?
right to receive a declared final dividend
64
What is the status of the memorandum for companies incorporated since the Companies Act 2006 came into force?
merely a formality
65
What is the main constitutional document for a company now?
its Articles
66
What binds the company and members as if they were covenants?
provisions in the Articles
67
What are the standard Articles under the Companies Act 2006 called?
Model Articles
68
How can Model Articles be changed?
may be amended
69
How can the Articles be amended under Section 21(1)?
by special resolution
70
What must any amendment to the Articles be made?
bona fide in the interests of the company as a whole
71
What must always be interpreted alongside the Articles?
Companies Act 2006
72
What do the Articles take effect as between the company and members?
contract in respect of their rights and obligations as members
73
Under what section does the Articles take effect as a contract?
Section 33
74
What are the two main ways to form a company?
incorporation from scratch or shelf company conversion
75
Where is relevant information submitted for incorporation from scratch?
Companies House online
76
What follows purchase of a shelf company for conversion?
formalities to enable necessary changes
77
What document must be delivered to Companies House for incorporation Section 9?
companys memorandum
78
What other document is needed if Model Articles are not used?
Articles
79
What else must be delivered to Companies House for incorporation?
fee
80
What application form is required for registration?
Form IN01
81
What information must Form IN01 contain regarding location?
proposed name and registered office
82
What is the requirement for a registered office address?
appropriate address
83
What type of company must be specified in Form IN01?
private or public
84
What contact information is required in Form IN01?
registered appropriate email address
85
What limitation type must be stated in Form IN01?
limited by shares or guarantee
86
What statement is needed regarding ownership structure Section 10 or 11?
statement of capital and initial shareholdings or guarantee details
87
What statement is required regarding key personnel Section 12 and 790?
statement of companys proposed officers and persons with significant control
88
What declaration of compliance is needed Section 13?
statement of compliance
89
What declaration of purpose is required Section 9e?
statement of lawful purpose
90
What type of address is required for the registered office by ECCTA?
address where delivery would be expected and recorded
91
Is a PO Box now acceptable as a registered office?
No
92
What future ECCTA formalities are mentioned but not yet in force?
verifying identity of directors secretary and PSCs
93
What does the Registrar of Companies send upon approving incorporation?
certificate of incorporation
94
What authenticates the certificate of incorporation?
Registrars official seal
95
What information is set out in the certificate of incorporation?
name of the company
96
What identification number is on the certificate of incorporation?
companys registered number
97
Does the companys registered number ever change?
No
98
What date is on the certificate of incorporation?
date of incorporation
99
When does the company become a legal entity Section 16(3)?
from the date of the certificate of incorporation
100
Under what section is the date of incorporation specified?
Section 15 CA 2006
101
What was a traditional method involving solicitors for company formation?
purchasing and converting a shelf company
102
What is a shelf company?
one set up in advance for sale
103
Who typically sets up shelf companies?
company registration agent or law stationer
104
Do some solicitor firms also set up shelf companies?
Yes
105
What change is often needed for a shelf company name?
to a name selected by the client
106
Under what section can a companys name be changed?
Section 77(1) CA 2006
107
How can a companys name be changed?
special resolution or means in Articles
108
What form is required to file a change of name?
Form NM01
109
What location often needs changing for a shelf company?
registered office
110
Under what section is the registered office change governed?
Section 87(1) CA 2006
111
What form is required to file a change of registered office?
Form AD01
112
What constitutional document of a shelf company might need amendment?
Articles
113
Under what section can Articles be amended?
Section 21(1) CA 2006
114
How are Articles typically altered?
by special resolution
115
What personnel of a shelf company usually need changing?
members directors and company secretary
116
What form is used to transfer shares?
stock transfer form
117
When does the client become the shareholder?
once entered on register of members
118
What form is used to appoint directors?
Form AP01
119
What form is used to appoint a company secretary?
Form AP03
120
What forms are used for director and secretary resignation?
Form TM01 and TM02
121
What is a crucial consideration regarding director appointments and resignations?
at least one director must always exist
122
What is a preliminary consideration for any company formation?
choosing a company name
123
What must a company name not be Section 53b?
offensive
124
What must a private limited company name end in Section 59?
limited or ltd
125
What must a company name not be Section 66?
the same as another on the index
126
What approval is needed for names suggesting government connection Section 54?
approval
127
What approval is needed for names containing sensitive words Section 55?
approval
128
Where does Companies House publish guidance on restricted names?
guidance documents
129
What type of intention may prohibit a company name Section 53A?
to facilitate dishonesty or deception
130
What connection may prohibit a company name Section 56A?
with a foreign government
131
What may prohibit a company name if it consists of it Section 57A?
computer code
132
What may prohibit a company name if previously directed to change Section 57B and C?
re-registering using that name
133
What type of indication may prohibit a company name Section 76?
misleading indication of activities
134
What type of use may prohibit a company name Section 76A?
criminal activities
135
What obligation does a company have once its name is registered Section 82?
to display it in prescribed locations
136
When does a new company name become effective Section 81(1)?
date of new certificate of incorporation
137
What post-incorporation issue involves electing a leader?
chairperson
138
What governing document might need amending regarding a chairpersons casting vote?
Model Articles
139
How is the Model Articles amended?
by special resolution
140
What is the default accounting reference date Section 391(4)?
last day of incorporation month
141
What form is used to change the accounting reference date?
Form AA01
142
What financial professional do companies usually need to appoint Section 394?
auditor
143
What tax registrations are typically needed?
corporation tax VAT PAYE National Insurance
144
What private agreement between shareholders is optional?
shareholder agreement
145
What does Section 51 CA 2006 aim to protect?
third parties believing they contract with an incorporated company
146
Against whom are pre-incorporation contracts enforceable Section 51?
persons purporting to act on the companys behalf promoters
147
What is the effect of a director entering a contract before incorporation?
director is personally liable
148
Can a company ratify a contract made before it existed?
No
149
What are the two routes for forming a company?
direct at Companies House or converting a shelf company
150
What documents are key for incorporation from scratch?
memorandum Articles fee Form IN01
151
What actions are needed when converting a shelf company?
meetings to change name office Articles personnel shareholders
152
Who bears liability for pre-incorporation contracts under Section 51?
the promoter
153
Is there any exception to promoter liability for pre-incorporation contracts?
subject to any agreement to the contrary
154
Who carries out much of the standard day-to-day business of a company?
the directors
155
Where must a decision of the board of directors be taken in accordance with?
companys Articles
156
What is a meeting of the shareholders called?
General Meeting
157
What is the abbreviation for General Meeting?
GM
158
What is a way for private companies to pass shareholder resolutions without a meeting?
in writing
159
Under what section of CA 2006 can private companies pass written resolutions?
Section 288
160
What percentage of votes is needed to pass an ordinary resolution?
over 50 percent
161
What percentage of votes is needed to pass a special resolution?
75 percent or more
162
What stipulates the type of shareholder resolution required?
CA 2006 or the Articles
163
What is a written resolution a method of?
voting
164
Where can shareholders vote at a General Meeting?
show of hands or on a poll
165
Who can shareholders appoint to exercise their rights at a GM?
proxy
166
How many votes does each shareholder have on a show of hands?
one vote
167
Is the number of shares held relevant on a show of hands?
No
168
How many votes does each shareholder have on a poll?
one vote per share
169
What right is important when shareholders disagree on a resolution?
right to demand a poll vote
170
Under what section of CA 2006 are poll vote conditions set out?
Section 321
171
Can the Articles relax poll vote conditions?
Yes
172
What Article of the Model Articles relaxes poll voting conditions?
MA 44
173
Who can demand a poll under MA 44(1)?
chairperson directors two voters ten percent voting rights
174
Can a poll be demanded in advance of a GM?
Yes
175
Can a poll be demanded after a show of hands result?
Yes
176
What percentage of shares did A have in Example 1?
45 percent
177
What percentage of shares did B have in Example 1?
20 percent
178
What percentage of shares did C have in Example 1?
20 percent
179
What percentage of shares did D have in Example 1?
15 percent
180
How many shareholders were in favour of the ordinary resolution initially?
two
181
How many shareholders were against the ordinary resolution initially?
two
182
How many shareholders needed to support the ordinary resolution on a show of hands?
three
183
Could A and B demand a poll vote in Example 1?
Yes
184
What percentage of shares did A and B have together?
65 percent
185
Could A and B pass the ordinary resolution on a poll together?
Yes
186
What percentage of shares did B C and D have together in Example 2?
55 percent
187
What percentage of votes is needed for a special resolution on a poll?
at least 75 percent
188
Could B C and D pass the special resolution on a poll without A?
No
189
What can a shareholder with a large percentage of votes do by demanding a poll on a special resolution?
block it
190
Under what section of CA 2006 may only private companies pass written resolutions?
Section 281
191
How many votes does each member have on a written resolution with share capital?
one vote per share
192
What percentage of total voting rights is needed for a written ordinary resolution?
simple majority
193
What must a written special resolution state?
it is a special resolution
194
What percentage of total voting rights is needed for a written special resolution?
not less than 75 percent
195
Under what section are written special resolution voting rights defined?
Sections 283(2) and (3)
196
What two decisions cannot be passed as written resolutions Section 288(2)?
removal of a director removal of an auditor
197
Under what section is removal of a director governed?
Section 168
198
Under what section is removal of an auditor governed?
Section 510
199
What percentage of voting rights did A and D have together in Example 3?
50 percent
200
Is 50 percent a simple majority of total voting rights?
No
201
What percentage of voting rights did B have against the ordinary resolution?
30 percent
202
What was Cs voting intention in Example 3?
abstain
203
How does abstaining count on a written resolution vote?
as voting against
204
What percentage of voting rights did B and C have against the resolution?
50 percent
205
Was 50 percent enough to block the written ordinary resolution?
Yes
206
Who passes Board Resolutions?
Directors
207
Where are Board Resolutions usually passed?
Board Meeting
208
Can Board Resolutions be passed without a meeting?
Yes in writing
209
What type of decisions are Board Resolutions for?
Day to day decisions
210
What is the voting threshold for Board Resolutions?
Simple majority
211
How is voting counted for Board Resolutions?
one vote per director
212
Who passes Ordinary Resolutions?
Shareholders
213
Where are Ordinary Resolutions passed?
General Meeting or in writing
214
What type of decisions require Ordinary Resolutions?
CA06 or Articles stipulate
215
What is the voting threshold for Ordinary Resolutions?
Simple majority
216
How is voting counted for Ordinary Resolutions on a show of hands?
one vote per shareholder GM only
217
How is voting counted for Ordinary Resolutions on a poll?
one vote per share
218
Who passes Special Resolutions?
Shareholders
219
Where are Special Resolutions passed?
General Meeting or in writing
220
What type of decisions require Special Resolutions?
CA06 or Articles stipulate
221
What is the voting threshold for Special Resolutions?
At least 75 percent
222
How is voting counted for Special Resolutions on a show of hands?
one vote per shareholder GM only
223
How is voting counted for Special Resolutions on a poll?
one vote per share
224
Where can board resolutions be passed informally?
at a BM
225
Who can call a Board Meeting under MA 9?
any director or the company secretary
226
What did Browne v La Trinidad establish regarding Board Meetings?
reasonable notice is necessary
227
What determines reasonable notice for a Board Meeting?
usual practice for the directors
228
What is the minimum number of directors for a quorum under MA 11(2)?
two directors
229
How are board resolutions passed under MA 7(1)?
majority vote on a show of hands
230
How many votes does each director have at a Board Meeting?
one vote
231
Who may have a casting vote at a Board Meeting under MA 13?
the chair
232
Who usually convenes a General Meeting?
the Board
233
What is the minimum notice period for a private company GM under s307(1) CA 2006?
14 clear days
234
What does clear days notice exclude?
day of meeting and day notice given
235
How is notice deemed served if posted or emailed under s 1147 CA 2006?
48 hours after sending
236
What document invites shareholders to attend a GM?
notice of the GM
237
Who approves the form of the notice of a GM?
the directors
238
Who authorises circulation of the notice of a GM?
the directors
239
What is the quorum for a GM generally under s 318(2) CA 2006?
two shareholders
240
What is the quorum for a single member company GM under s 318(1) CA 2006?
one shareholder
241
What type of meeting is often sandwiched between two Board Meetings?
a GM
242
What is the first meeting in the GM sandwich sequence?
a BM to call the GM
243
What is the second meeting in the GM sandwich sequence?
a GM for shareholder voting
244
What is the third meeting in the GM sandwich sequence?
a BM to enact the shareholder vote
245
What follows the second Board Meeting in the GM sandwich sequence?
Post Meeting Matters
246
What does BM1 involve in the full notice GM sequence?
deciding GM issues convening GM approving notice
247
What does the notice of the GM set out?
wording of resolutions
248
Who circulates the notice of the GM?
company secretary or directors
249
What takes place at the General Meeting?
shareholders vote on resolutions
250
What happens at the second Board Meeting in the full notice sequence?
directors informed of vote authorise post meeting actions
251
What do Post Meeting Matters involve?
filings at Companies House updating internal records
252
What is the notice requirement for BM1?
reasonable notice
253
What is the time between BM1 and the GM in a full notice scenario?
at least 14 clear days
254
What is the notice requirement for BM2?
reasonable notice
255
What can shorten the usual GM notice period?
sufficient members agreement
256
What percentage of nominal share value is needed for short notice agreement in a private company under s 307(5) CA 2006?
not less than 90 percent
257
Can a companys Articles increase the short notice threshold?
Yes up to 95 percent
258
Do Model Articles increase the short notice threshold?
No
259
How many shareholders were in the short notice example?
five
260
What percentage of shares did each shareholder have in the short notice example?
20 percent
261
How many shareholders needed to approve short notice in that example?
all five
262
What type of shares did the company in the short notice example have?
ordinary shares
263
What rights did the ordinary shares carry?
voting rights
264
What can happen if all shareholders are available when directors decide to convene a GM?
short notice sequence in under an hour
265
What does the initial BM resolve in a short notice scenario?
convene GM approve notice and consent form
266
What happens after the initial BM in a short notice scenario?
adjourned for immediate GM
267
What takes place immediately following BM adjournment in a short notice scenario?
the GM vote
268
What happens after the GM in a short notice scenario?
BM is reconvened
269
What does the reconvened BM authorise?
post meeting actions
270
What is the abbreviation for Written Resolution?
WR
271
What sections of CA 2006 govern Written Resolutions?
Sections 288 to 300
272
Who can propose a Written Resolution?
directors or members of a private company
273
When is a Written Resolution passed?
when required majority of eligible members agree
274
What determines the required majority for a Written Resolution?
whether ordinary or special resolution
275
Who is an eligible member for a Written Resolution?
member entitled to vote on circulation date
276
What happens if insufficient responses are received for a Written Resolution?
it will lapse
277
What is the lapse period for a Written Resolution under Model Articles?
28 days
278
Can a company choose a different lapse period in its Articles?
Yes
279
What resolutions cannot be passed by Written Resolution under s 288(2) CA 2006?
removal of director or auditor
280
Where must Written Resolutions be recorded?
minute books of the company
281
What is the first step in the Written Resolution sequence?
BM to propose WR approve wording circulate WR
282
To whom is the WR circulated?
shareholders eligible members
283
What details accompany the WR circulation?
how to agree and the lapse date
284
What are the two options after BM1 in a Written Resolution sequence?
shareholders present or not present
285
What happens if shareholders are present for a Written Resolution?
BM adjourned immediate approval by signing
286
What constitutes a vote against a Written Resolution?
not signing or abstaining
287
What happens if shareholders are not present for a Written Resolution?
WR circulated awaits required approval lapses after 28 days MA
288
What happens after WR approval or lapse?
BM reconvened or second BM called
289
What do Post Meeting Matters break down into?
Internal Filing at Companies House Record Keeping
290
How long must minutes of all meetings be kept?
10 years
291
What internal records need updating after meetings?
statutory books eg registers
292
What type of shareholder resolutions must be filed at Companies House?
all special resolutions
293
Do ordinary resolutions generally need filing?
No
294
What is an exception to ordinary resolution non-filing?
authority to allot shares under s551
295
What other documents must be filed at Companies House after meetings?
amended Articles relevant forms
296
What type of documents need to be kept at the registered office?
directors service contracts
297
What should always be considered when dealing with meeting procedures?
Who Call Notice Quorum Agenda Voting Post-meeting
298
What must the notice of a GM describe under s 311(2) CA 2006?
business to be transacted in sufficient detail
299
What must the notice specify if a special resolution is proposed under s 283(6)(a) CA 2006?
resolution is special and its text
300
Who makes decisions on behalf of the company?
directors and shareholders
301
How do directors make decisions?
passing Board Resolutions in Board Meetings
302
How do shareholders make decisions?
passing Shareholder Resolutions in GMs or by Written Resolution
303
What power do shareholders with larger voting rights hold?
block or pass resolutions
304
What must a company follow for its decisions?
particular order and lawful procedure
305
What are two ways to speed up company decision making?
shortening GM notice or using written resolution
306
What needs to be dealt with after all company meetings?
various post-meeting matters
