Limited Company

Question 1

What are model articles?

Answer 1

Internal rule book of rules & contract between company & shareholders and each other

Question 2

Who needs to be entered on the PSC register?

Answer 2

A shareholder who:-

Holds more than 25% of shares
Has more than 25% of voting rights
Have the right to appoint/ remove the majority of the board

These are known as persons with significant control

Question 3

What is the memorandum of association?

Answer 3

Statement of intention to form a company and be a shareholder with at least 1 share

Question 4

When a certificate of incorporation is issued what is the company also given?

Answer 4

Registration number

Question 5

When fixing an accounting reference date in the first board meeting, if not chosen what date is used?

Answer 5

Last day of the month of incorporation

Question 6

How long should BM/GM minutes be kept?

Answer 6

10 years

Question 7

Does PSC needed to be filed at CH

Answer 7

Yes

Question 8

Who usually calls GMs?

Answer 8

Directors

Question 9

When can a shareholder request a director to call a GM?

Answer 9

When the shareholder has at least 5% paid up shares capital with voting rights.

Question 10

How long does the director have to sort a GM called by a shareholder?

Answer 10

21 days from request to call a GM
28 days from calling GM to the meeting

Question 11

What happens if the director does not call the GM from a shareholder?

Answer 11

Shareholder may call the meeting themselves and recover any costs from the company

Question 12

Is it a criminal offence to not file accounts every year

Answer 12

Yes

Question 13

Who is exempt for accounts to be audited?

Answer 13

SMALL COMPANIES

Question 14

what is a small company?

Answer 14

Two or more :-
Turnover of no more than 10.2 million
Balance sheet no more than 5.1 millio
Not more than 50 employees

Question 15

What must a director also file with accounts?

Answer 15

Financial report

Question 16

Is a small company subject to filing a financial report?

Answer 16

No

Question 17

How long does a company have to file accounts?

Answer 17

9 months from accounting reference period

Question 18

What must also be filed at the end of each year within 14 days of the date of the COI?

Answer 18

Confirmation statement

Question 19

When do resolution need to be filed for each?

Answer 19

BR never
OR not usually with one exception
SR Always

Question 20

What is a non executive director?

Answer 20

A person who hold the office of director. They do not work for the company. Can be paid expenses

Question 21

What is an executive director?

Answer 21

A director who holds office of director and is in a paid position. Usually have a specific title

Question 22

Does shareholders owe a fiduciary duty to the company

Answer 22

no they can act in their own interests

Question 23

Why are SHs approval needed for fixed term Ds contracts

Answer 23

Because these contracts could lead to significant liability if wrongfully terminated

Question 24

How many members must a company have?

Answer 24

At least one

Question 25

What is the max number of members?

Answer 25

No maximum

Question 26

Can a shareholder be a shareholder for another company

Answer 26

Yes

Question 27

Are there different classes of shares that can be issued

Answer 27

Yes

Question 28

Can shares have different voting rights attached to them

Answer 28

Yes

Question 29

What are the two different shares

Answer 29

Ordinary Shares Preference Shares

Question 30

What is a shareholders agreement?

Answer 30

Agreement between shareholders Eg - voting rights and how they are to be exercised to protect minority shareholders

Question 31

Who is a majority shareholder?

Answer 31

SHs who hold more than 50% of voting shares

Question 32

Who is a minority shareholder?

Answer 32

Those who hold 50% or less than the voting shares

Question 33

What is the definition of a Director

Answer 33

Includes any person occupying the position of D what whatever means called

Question 34

What is prima facie evidence of a SHs holding in a company

Answer 34

Share certificate

Question 35

S33 CA 2006 creates a statutory contract between what parties

Answer 35

The SHs and the company and between the SHs themselves

Question 36

Do private SH agreements need to be filed at companies house

Answer 36

No

Question 37

For a general meeting what is SH entitled to

Answer 37

Notice No notice - GM INVALID

Question 38

Who can demand a poll vote

Answer 38

A SH with at least 10% voting shares

Question 39

Can poll voting be excluded from the articles

Answer 39

No

Question 40

What percentage is needed for a SH to be able to request a written resolution

Answer 40

5%

Question 41

For unfair prejudice what do SHs need to prove & what is the remedy

Answer 41

Unfairness and prejudice again at the Ds Commonly SH is bought out by other SHs

Question 42

What is a derivative claim

Answer 42

Where the SH brings a claim on behalf of the company from some wrong doing

Question 43

What are the 7 directors statutory duties

Answer 43

Duty to act within the companies powers Duty to promote success of company Duty to exercise independent judgement Duty to exercise reasonable care skill and due diligence Duty to avoid COI Duty not to accept benefits from 3rd parties Duty to declare an interest in proposed or existing transactions with the company

Question 44

Can the Board authorise a COI

Answer 44

Yes as long as the quorum is met and D not entitled to vote

Question 45

Who authorises a COI UNDER THE CA 2006

Answer 45

The board

Question 46

Who can authorise a benefit from 3rd parties

Answer 46

Directors/board

Question 47

If a breach has occurred not to accept benefits from third parties who can ratify the breach

Answer 47

Shareholders

Question 48

Does a D need to declare an interest if other Ds are aware of it

Answer 48

No

Question 49

What three ways can a declaration of an interest in a proposed transaction be made

Answer 49

At a meeting of the Directors By written notice By a general notice

Question 50

Can SHs ratify a breach of a Ds duty if so how

Answer 50

Yes by an OR

Question 51

When may a court relieve a D from liability of a breach of a duty

Answer 51

If the D acted honestly and reasonably In all the circumstances D ought to be fairly excused

Question 52

What is a SPT and what is needed for one to proceed

Answer 52

A substantial transaction between the D or a connected person OR of the SHs

Question 53

Can approval of a SPT be made before and after

Answer 53

Yes by OR on the condition of SH approval being obtained within a reasonable time

Question 54

Can a loan be a SPT

Answer 54

No

Question 55

If a D or connected person authorising a SPT did not know they were in contravention of authorising a SPT can they be liable Same for a loan from company to D

Answer 55

No

Question 56

What is needed for a loan from a company to a director or connected person

Answer 56

OR

Question 57

What must be made available before an OR can be given for a loan

Answer 57

A memorandum of the loan avaivale for inspection 15 days before GM STATING nature of loan, purpose and companies liability

Question 58

What are the three exceptions where SHs approval is not needed for a loan

Answer 58

Up to £50k for business Fund legal proceedings Minor transactions under £10k

Question 59

What must Directors do in relation to accounting and tax

Answer 59

Keep an adequate record for 6 months (ltd)

Question 60

What must happen to the annual filing accounts

Answer 60

D must sent to SHs and CH within 9 months of the accounting reference period

Question 61

If D is late filing accounting records what happens

Answer 61

Penalties can apply

Question 62

Can the board authorise making a secret profit

Answer 62

No

Question 63

To whom do directors owe a the duties under 171 - 177

Answer 63

The company

Question 64

My mnemonic for directors duties

Answer 64

Powers promote independence care conflicts benefits & declaration

Question 65

What is a way that satisfies the statutory insolvency test of a company

Answer 65

The company has explicitly failed to pay a creditor who has already obtained a judgment debt. This clearly satisfies the statutory insolvency test under s.123 IA.

Question 66

Does a limited company need a AGM

Answer 66

. The statutory requirement to have an annual general meeting is excluded for private companies under CA 2006

Question 67

Is there a requirement for SHs to be told about BMs

Answer 67

there is no statutory requirement for shareholders to be informed of board meetings.

Question 68

What does a Small company need to send/not send for account requirements

Answer 68

Should produce unaudited accounts No need for annual report or annual audits

Question 69

If all members are entitled to vote on a matter and are in unanimous agreement then can the decision be valid When do meetings need to be held

Answer 69

Yes no meeting or resolution is required however there are occasions where a meeting is required reducing capital/dismissing a D to ensure the resolution is legally binding on company

Question 70

Can public companies use written resolutions

Answer 70

No even if thier AOA incorrectly says it can

Question 71

What percent of SHs can request a WR

Answer 71

5% voting rights

Question 72

How long do SHs have to respond to a WR

Answer 72

28 days

Question 73

What is required to ensure that resolutions are valid

Answer 73

Clear and concise Notice of at least 14 days to all SHs

Question 74

Do private companies need an AGM

Answer 74

No

Question 75

Short notice general meeting what is needed from SHs

Answer 75

Majority of SHs holding at least 90% of shares

Question 76

If the quorum is not met what happens

Answer 76

Any resolutions not valid

Question 77

What two ways can voting in a GM take place

Answer 77

Show of hands Poll vote

Question 78

A declaration by a chair that a resolution is passed or not is

Answer 78

Conclusive

Question 79

Poll voting explain

Answer 79

Preferred by larger companies and votes are calculated by taking into acccount the number of shares held by a SH