Limited companies: part 2 Flashcards
(23 cards)
How many directors must a private company have? And how many directors must a public company have?
Private - 1
Public - 2
How is a non-executive director appointed?
Under MA17 and done either by an OR or a BR
How is an executive director appointed?
Under MA19 and by BR
Following the appointment of a director what must the company do?
- Update the register
- File for AP01 within 14 days
What are the director’s general duties under s170 - s180 CA
171 - To act within company’s constitution and exercise their powers for the proper purpose
172 - promote the success of the company
173 - exercise independent judgement
174 - exercise reasonable care, skill and diligence
175 - avoid conflicts of interest
176 - not accept benefits from third parties
177 - declare interests in a proposed transaction
How can a breach of s175 (conflicts of interest) be authorised?
By a BR although the interested director’s vote will not count
When will s176 not be breached?
When the acceptance of the benefit cannot reasonably be regarded as likely to give rise to a conflict
How coulda breach of duty be authorised?
Shareholders can ratify a breach of duty by OR but the vote of any interested director who is also a shareholder and those persons connected with will not count
When will a director be personally liable to third parties?
Where they have given a personal guarantee or is guilty of wrongful trading, fraudulent trading or misfeasance
What is wrongful trading?
Where the company continues to trade, and they knew, or ought to have known that, there was no reasonable prospect of the company avoiding insolvency proceedings
What is fraudulent trading?
Where the company carried on business with the intent to defraud creditors or for any fraudulent purposes
When does a service contract for executive directors have to be approved by OR?
When it is of a guaranteed fixed term of more than two years
Can a director vote and count towards the quorum in a board meeting where their service contract is approved?
No unless MA14 is temporarily disapplied by OR or has been removed
Can directors approve substantial property transactions?
No shareholders approval is required by OR
What is a substantial property transaction?
The acquisition/disposal of a non-cash asset where:
- the parties involved are the company and a director or a person connected to a director AND
- the asset is substantial so its value is not £5k or less, it is over £100k or it is between the two and exceeds 10% of the company’s net asset value
Who is not considered a connected person?
brothers, sisters, grandparents, uncles, aunts, nephews and nieces
What happens if there is a breach of s190 (SPT)?
The transaction is voidable
When does a loan to a director need to be approved by shareholders in an OR?
When it is more than £10k in total
What happens to the transaction is not approved by OR?
It is voidable unless ratified by OR
How can a director be removed?
- voluntary retirement/resignation
- removal
- disqualification
How can a shareholder remove a director?
Through an OR. Special notice of the OR is required to be given to the company.
How many days’ notice needs to be given to the company to remove a director by OR?
at least 28 days otherwise the resolution will be ineffective
Can the written resolution procedure be used for shareholders to remove a director?
No because the director has the right to be informed and to make representations against their removal
