Nature and formation of companies Flashcards
(10 cards)
In addition to the general requirements for a private limited company, what two additional things are required to register as a public limited company?
- Nominal share capital of at least £50,000
- Trading certificate
Is the MoA registered with CH?
Yes
What five things are dealt with in the articles?
What is the legal effect of the articles?
- Directors’ meetings and decision making
- Appointment/removal of directors
- Share capital
- Rights attached to shares
- Shareholder meetings
They are a contract between the company and each of the shareholders, as well as the shareholders with each other
Whilst a company need not restrict its objects, what must the directors do if it does restrict them, and what is the consequence of failing to do so?
Even though a director would be in breach, what is the status of an act done beyond the scope of the objects?
Directors must adhere to the restriction, and they breach their duty if they do not, and may be subject to an injunction if the act is not yet carried out, otherwise equitable action for damage caused
It is still valid
What is the extent of a shareholder’s right to enforce provisions of the articles, and when is a shareholder not able to enforce?
Only insofar as it relates to membership rights, and a shareholder cannot enforce the articles in any other capacity, e.g. a personal right, or if they are also a director
What is one thing an amendment to the articles cannot require?
A shareholder to increase their liability to the company, i.e. subscribe for more shares
What does an entrenched provision of the articles require?
In what two ways can provision for entrenchment be made?
A more onerous approval process than even a special resolution, e.g. 100% of shareholders
In the articles on formation (with notice of this given to Companies House), or by special resolution
What must be true of an amendment to the articles before a shareholder who did not vote for it can apply for the court to set it aside?
What alone is not grounds for challenging an amendment to the articles?
No reasonable person would consider it to be for the benefit of the company
That it adversely affects minority shareholders, as long the amendment is made in good faith
What are the only times that the corporate veil has deemed to have been lifted?
Directors or shareholders in breach of other legal provisions, e.g. company was formed to carry out a fraud or avoid existing obligation
What is the minimum number of directors in a private company and a public company?
Private: One
Public: Two
