Forming a Company and Decision-Making Flashcards
What was required to incorporate a company under the CA 1985?
The memorandum and articles of association. The memorandum contained an objects clause (which was deemed part of the articles) and directors could not act outwith the objects clause or this would be ultra vires.
What is required to incorporate a company under the CA 2006?
Articles, memorandum (only for registration to declare subscribing members intend to create company), fee, Form IN01. The company has unrestricted objects unless specifically restricted by the articles.
What are the articles of association?
A constitutional document of a company, regulating the relationship between the company and its shareholders. Acts as a binding contract between the company and its members, so court can grant injunction for infringement of members’ rights by the company. Not a contract between members - that is an ShA.
What are the main characteristics of the articles of association?
- Might be model articles if specified or if the company does not register articles at CH.
- Might be more onerous than the model articles
- Cannot remove or vary the right to demand a poll vote at GM
How can the articles be amended?
Articles can be altered at a future date by special resolution of the shareholders (s.21). Only valid amendment if bona fide in interests of company as a whole.
What is needed to incorporate a company from scratch?
- Articles of association (whether wholly / partly model or tailored)
- Memorandum
- Fee
- Form IN01
Once the application is approved, a certificate of incorporation will be issued by CH. Company becomes legal entity at this time and can begin trading.
What is contained in Form IN01?
- Company name
- Registered office
- Private / public
- Shares or guarantee
- Capital / initial shareholdings / guarantee details
- Proposed directors and secretary and PSCs
- Statement of compliance
What is required to incorporate a company using a shelf company?
- Special Resolution: to change the name of the company (NM01) and articles.
- Board Resolution: change registered office (Form AD01)
- Ordinary Resolution to: transfer the shares to the new subscribers, appoint directors (AP01) and secretary (AP03) and approve resignation of directors and secretary (TM01 and TM02).
What is the difference between incorporating from scratch and incorporating through a shelf company?
A shelf company is already incorporated: it can enter into contracts and trade. It simply requires to be tailored (i.e change of name, change of registered office, directors, company secretary etc).
What changes must be made post-incorporation?
- Election of chairperson
- Change accounting ref date (Form AA01)
- Appoint auditor
- Register for corporation tax, VAT, PAYE and NI
- Shareholders Agreement
What are the characteristics of board resolutions?
- Each director gets one vote
- Passed by a majority unless articles specify otherwise
- Passed at board meetings
- if directors are all in agreement, they can pass a written resolution.
Where and how can shareholder resolutions be passed?
At a general meeting by the shareholders or (for private companies only and not where the decision is to remove a director or auditor), written resolution.
What is an ordinary resolution?
A resolution which can only be passed by 50% of shareholders + 1.
Used for all decisions where a special resolutionb is not required.
What is a special resolution?
A resolution which can only be passed by 75% or more of the votes being in favour. Must be filed at the registrar within 15 days of passing.
When must an ordinary and special resolution be filed at the Registrar?
- Ordinary: never, unless it is an OR to allot shares
- Special: always, within 15 days of passing the resolution.
What are the 2 methods for voting?
- Show of Hands: 1 vote per shareholder, used typically. Might appoint a proxy to attend / vote at GM. Votes counted out of all eligible shareholders present and voting.
- Poll: 1 vote per share
Who has the right to call a poll vote? and when?
In advance of GM or at GM immediately after show of hands.
- chair
- director
- 2 or more person with right to vote
- person(s) representing at least 10% of total voting rights of all shareholders entitled to vote
When can a written resolution be used?
- Only private companies
- Not for use to remove a director or auditor
- abstaining counts as a vote against
What is the procedure for using a written resolution?
- BM adjourned and WR approved immediately by s/h if they are available
- if shareholders not immediately available, BM closed + WR passed once it receives majority or lapses after 28 days
- 2nd BM called and PMM carried out
What are the requirements for a board meeting?
- Can be called by director or company secretary if directed by director
- 2 directors for quorum (or in articles) otherwise cannot validly consider business
- Reasonable notice
- Simple majority.
What are the requirements for a GM?
- 14 clear days notice
- If notice is posted or emailed, deemed served 48 hours after sending
- Notice must detail when / where meeting is and wording of resolutions.
- Quorum = 2 shareholders or 1 for single member companies.
When and how can a GM be called on short notice?
If agreed by a majority in number of shareholders + that majority together hold shares with nominal value of not less than 90% of the total nominal value of shares with rights to attend and vote at GM. Can be increased to 95% in articles.
Procedure:
1. BM to approve notice and shorter notice
2. Shareholders sign consent to shorter notice
3. GM takes place immediately
4. BM reconvenes to carry out PMMs
Which post meeting matters should be addressed?
- Record minutes of meetings & copies of all written resolutions and keep for 10 years (otherwise, criminal offence)
- File special resolutions & OR if alloting shares
- Update registers (of directors and secretaries, of members and of PSCs) otherwise criminal offence
- Notify registrar of change of name, change of office and change of directors / details.
