Module 10: Company Formation and Promoters

Question 1

What is the documentation required for registration?

Answer 1

Application for registration
Memorandum of association
Statement of share capital and initial shareholdings
Statement of proposed officers
Statement of initial significant control
Statement of compliance
Registration fee

Question 2

Who are companies registered with in the UK?

Answer 2

Registrar of Companies
Scotland send to Edinburgh
England and Wales send to Cardiff
NI Belfast

Question 3

What must the application for registration must state?

Answer 3

Company's proposed name
Where registered office to be situated
Statement of intended address
Whether liability is to limited, shares/guarantee
Ltd or Plc
Intended principal business activity

Question 4

What is the memorandum of associated?

Answer 4

Brief document
Evidence subscribers intend to form company and become members
Evidence prepared to take a share

Question 5

What is included in the statement of share capital and initial shareholdings?

Answer 5

Snapshot of share capital
No. shares to be taken 
Aggregate nominal value of them
Aggregate amount unpaid on them
Rights for each class
Where by guarantee- statement of guarantee (will contribute amount if wound up)

Question 6

What is included in the statement of proposed officers?

Answer 6

Details of first directors
Company secretary (required for plc)
Service address for each director and residential address

Question 7

What is included in the statement of initial significant control?

Answer 7

Statement whether any individual holds more than 25% shares

Info about those infos

Question 8

What is the statement of compliance?

Answer 8

Requirements of CA 2006 met

Offence to make false statement

Question 9

What is the registration fee?

Answer 9

Sent with documents

£12 for online application

Question 10

When is a company required to submit Articles of Association?

Answer 10

If it does not want to adopt the model articles

If non submitted will be incorporated with model articles appropriate to type of company

Question 11

What will the certificate of incorporation state?

Answer 11

Name and registered number
Date of incorporation
Limited or unlimited
Plc of Ltd
If reg office is in E/W, S, NI

Question 12

When does company come into existence?

Answer 12

Date of incorporation

Question 13

What did the Small Business, Enterprise and Employment Act (SBEE) 2015 introduce?

Answer 13

Royal Assent 26 March 2015
Changes to the CA 2006
Process of registering a company
'One click' registration
Same time provide HMRC with all info for tax, VAT and PAYE
'Electronic means only'

Question 14

What is the Streamlined Company Registration Service? (SCRS)

Answer 14

Info required by Companies House and HMRC supplied through SCRS on a single occasion to a single recipient by electronic means

Question 15

Where a company is applying to be registered as a public company what else do they have to apply for?

Answer 15

Trading certificate

Question 16

What must the application for a trading certificate contain?

Answer 16

Nominal value of company’s allotted share capital is not less than £50,000
Amount of Preliminary expenses
Amount paid to promoter and consideration for payment
Statement of compliance (obtained 1/4 nom and premium)

Question 17

What is trading certificate conclusive evidence of?

Answer 17

Company is entitled to do business and exercise borrowing powers
Can’t do so before
Directors liable to penalties if do
If plc not obtained one after 1 year of incorp can be wound up under Insolvency Act 1986

Question 18

What is the certificate of incorporation conclusive evidence of?

Answer 18

Requirements of the Act have been met

Question 19

What company registers and other info must companies keep available for inspection?

Answer 19

Register of members
Register of directors and secretaries
Copies of charges

Question 20

How long must companies keep certain registers available for inspection?

Answer 20

10 years

Question 21

What are the details of members companies must keep?

Answer 21

Name and address of each
Number of shares of each
Date of becoming a member and ceasing to be

Question 22

What are the details of directors (and secretaries)companies must keep?

Answer 22

Names of present and former
Service address
Directors county of residence and nationality
Date of birth

Question 23

What are the details of copies of charges?

Answer 23

Copies of fixed and/or floating charges including any instruments amending charges and related docs

Question 24

Who can inspect the statutory registers and copies of charges?

Answer 24

Shareholders and creditors without charge

Public for nominal fee

Question 25

Register of People with Significant Control?

Answer 25

From 6 April 2016 all must keep a PSC Individual who holds more than 25% of the shares Calculated by reference to nom value Info includes name, address, date of birth, nationality , country of residence, date become registrable and interest in company

Question 26

The Confirmation statement?

Answer 26

Every company at least every 12m required to deliver Keep Registrar informed No changes or the changes e.g. PSC, directors, type of company, share capital

Question 27

What is the definition of a promoter?

Answer 27

Person who forms a company 'Undertakes to form a company with reference to a given project and to set it going and takes necessary steps to accomplish'

Question 28

Promoter includes anyone who what?

Answer 28

Makes business preparations | not someone who acts in professional capacity e.g accountant

Question 29

What are the duties of a promoter?

Answer 29

Owed fiduciary duty to company setting up Promoter often to be owner Must disclose to other shareholders details of profit making Plc via prospectus or listing particulars May keep profit even if doesn't disclose properly- full knowledge

Question 30

Remedies for breach of promoters fiduciary duty?

Answer 30

Primary remedy- rescind contract and recover money Too late to rescind- sue for return of secret profit Liquidation- restore company anything obtained in breach

Question 31

Payment for Promoters pre-incorporation services?

Answer 31

No automatic right | Usually arrange that the first directors will either pay expenses or refund

Question 32

What is a pre-incorporation contract?

Answer 32

Made on behalf of company before incorporated Made by promoter acting like an agent for company Can't ratify as not in existence when made May enter into a new contract on similar terms

Question 33

Liability for pre-incorporation contracts?

Answer 33

Promoter is personally liable | Protects 3rd parties

Question 34

Ways promoter can avoid liability?

Answer 34

Making draft contracts- complete on formation Include clauses allowing promoters liability to come to an end if contract novated Buying a company 'off the shelf'

Question 35

What is buying a company 'off the shelf'?

Answer 35

Admin requirements in relation to forming a company can be avoided Shares transferred to buyer and existing directors resign Name likely to be changed