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CCA > P2 - 5. Regulatory requirements for companies > Flashcards

P2 - 5. Regulatory requirements for companies Flashcards

1
Q

What are the different types of company that can be incorporated under the Companies Act 2006?

A
  • Public company limited by shares
  • Private company limited by shares
  • Private company limited by guarantee
  • Private unlimited company, with or without a share capital
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2
Q

What are the specialised variants?

A

CIO - Charitable Incorporated Organisation

CIC - Community Interest Companies

RTMs - Right to Manage Companies

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3
Q

What are the three ways company registration can be undertaken?

A
  1. Electronic software filing using an approved software product
  2. Paper filing
  3. Web Incorporation Service
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4
Q

What are the five things that must be lodged with the Registrar to incorporate a company?

A
  1. Memorandum of association - There must be at least one subscriber to the memorandum, who must agree to take at least one share or agree to be a member if the company is not to have a share capital
  2. Articles of Association – 3 types
    ((a) to adopt the relevant set of Model Articles in their entirety;
    (b) to adopt the relevant set of Model Articles with modification; or
    (c) to adopt an entirely bespoke set of Articles.
  3. Form IN01
  4. Name approval
  5. Registration fee
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5
Q

Additional requirements of a CIC?

A

Demonstrate how it will meet the community interest test
confirm using Form CIC36 that the company will benefit the community

Excluded Company Declaration (ECD),

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6
Q

What are the additional requirements for the registration of a Right to Manage Company?

A

No registration requirements, however, in order to be an RTM company the company must:
* be a private company limited by guarantee;

  • ensure its Articles comply with the provisions for RTM Companies;
  • hold a freehold or leasehold interest in a qualifying premises;
  • not be a commonhold association; and
  • have as its members the tenants of flats in the premises or landlords under leases of those premises.

An RTM company ceases to be an RTM company if it no longer continues to fulfil any of these conditions.

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7
Q

Which changes of company status are permitted?

A
  • Private to public (unless previously re-registered as unlimited) (CA2006 s. 90).
  • Public to private limited (CA2006 s. 97).
  • Private limited to unlimited (unless previously re-registered as limited) (CA2006 s. 102).
  • Unlimited to limited (unless previously re-registered as unlimited) (CA2006 s. 105).
  • Public to unlimited (unless previously re-registered as limited or unlimited) (CA2006 s. 109).
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8
Q

When is it not possible to change a company’s type?

A
  • to or from that of a company limited by guarantee; or
  • from being a CIC company.
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9
Q

What is required to re-register a private company to a public company?

A

A special resolution

Copy of the resolution and RR01 delivered to registrar

Must meet additional requirements (issued share capital)

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10
Q

Public company to a private company?

A

Special resolution

File an RR02

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11
Q

What is the process from public or private limited company to unlimited company?

A

Re-registration of either a public or a private limited company to an unlimited company requires unanimous
shareholder consent.

Resolutions and forms should be filed at Companies Houses

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12
Q

Which changes are companies required to give notice to the Registrar?

A

Change to their constitution
Changes to officers
Changes to members
Changes to PSC

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13
Q

What are the different types of filing?

A

Hard copy pqper filingOnline, webFiling, software filing,

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14
Q

What are some of the criminal offences under the Companies Act?

A
  • failing to file accounts on time (CA2006 s. 451)
  • failing to enter a director’s details in the register of directors or failing to update those details within the prescribed timescale (CA2006 s. 162);
  • failing to file an amended copy of the Articles following an amendment (CA2006 s. 26);
  • failing to respond to a request for confirmation that the details on the central register are up to date (CA2006 s.128F);
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15
Q

How is The Governance Code divided?

A

5 sections containing 18 main principles

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16
Q

What are the five sections?
The Governance Code is divided into

A
  1. Board Leadership and Company Purpose
  2. Division of Responsibilities
  3. Composition, Succession and Evaluation
  4. Audit, Risk and Internal Control
  5. Remuneration
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17
Q

Apply and explain?

A

Apply principles in full and explain how

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18
Q

Features of a merger?

A

Members of each class of shares of the merging companies must approve the terms of the scheme by special resolution requiring approval of 75% of the members present, in person or by proxy, at the general or class meeting convened to consider the resolutions.

The directors of each company that is merging must report (i) to their members at the meeting(s) convened to consider the merger arrangements and (ii) to the directors of the other merging companies of any material changes to the property and liabilities of their company between the date the draft terms were approved and the date of the members’ meeting(s) (CA2006 s. 911B).

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19
Q

Features of a division

A

The members of each class of shares of the companies involved in the division must approve the terms of the scheme by special resolution requiring approval of 75% of the members present, in person or by proxy, at the general or class meeting convened to consider the resolutions CA2006 (s. 922).

The directors of each company that is involved in the division must report (i) to their members at the meeting(s) convened to consider the division arrangements and (ii) to the directors of the other companies involved in the division of any material changes to the property and liabilities of their company between the date the draft terms were approved and the date of the members’ meeting(s) (CA2006 s. 927).

19
Q

Objective of a takeover?

A

The acquisition, usually by a company (the offeror or acquirer), of the whole or most of the issued share capital of another company (the target or offeree).

20
Q

Arrangements and Reconstructions

A
  • The approval of the court is required and consequently the legal advisers of both companies will be involved in settling the necessary documentation.
  • Meetings to approve schemes of compromise or arrangement are convened under the authority of the court (CA2006 s.896).
  • The meeting itself will be managed by the directors and company secretary in the same way as any general meeting
  • Any notice convening a meeting of the members or creditors must be accompanied by a statement complying with the provisions of CA2006 s. 897 explaining the effects of the compromise or arrangement, and, in particular, any material interests of any director and the impact of the scheme on those interests (CA2006 s. 897).
  • Provided 75% of the members or 75% of the creditors, by value of claim, approve the terms of the scheme the court may sanction the scheme of compromise or arrangement (CA2006 s. 899).
21
Q

What are the main types of takeover?

A
  • Share sale agreement
  • Public purchase
  • Takeover offer
  • Scheme of arrangement or compromise
22
Q

What is The Takeover Panel?

A

An independent body, established in 1968.

Main function is to issue and administer the City Code and to supervise and regulate takeovers and other matters to which the City Code applies in accordance with the Rules set out in the City Code.

23
Q

What is an important aspect of the City Code?

A

The requirement for a shareholder or group of shareholders (referred to as a concert party) acting together to make a takeover offer if the total voting rights they control reaches 30% or more of the total votes available. This is known as a mandatory offer.

24
Q

What does The City Code reflect?

A

The collective opinion of those professionally involved in the field of takeovers as to appropriate business standards and as to how fairness to shareholders and an orderly framework for takeovers can be achieved.

25
Q

When does a company become insolvent?

A

When it is unable to pay its debts as they fall due

26
Q

When will a company be deemed unable to pay its debts?

A
  • it fails to comply with a statutory demand for a debt in excess of £750;
  • it fails to satisfy enforcement of a judgment debt;
  • the court is satisfied that the company is unable to pay its debts as they fall due; or
  • the court is satisfied that the liabilities of the company exceed its assets.
27
Q

What is a members voluntary winding up?

A

Solvent winding up

Directors have prepared a statutory declaration within the five weeks immediately preceding the resolution to wind up of the opinion that the company will be able to pay its debts in full, with interest at the official rate, within a period not exceeding 12 months from commencement of the winding up (IA 1986 ss. 89 and 90).

28
Q

What is a Creditors’ voluntary winding up?

A

Appropriate where a declaration of solvency cannot be made

29
Q

When would a company be wound up by the court?

A
  • the company so resolves by special resolution;
  • a judgment creditor or a creditor petitions the court where an amount in excess of £750 has not been paid
    following written demand for payment (IA1986 s. 123);
  • it is just and equitable for the company to be wound up; or
  • the company fails to comply with certain statutory requirements, e.g. the minimum number of members (IA1986 ss. 122 and 124).
30
Q

What is the role of the liqudator?

A

The liquidator should:
1. take over responsibility for the assets of the company, together with its books and records;

  1. take other necessary steps to protect and realise the assets, as indicated above in the case of a creditors’ voluntary winding up;
  2. disclaim any onerous property or unprofitable contracts (IA1986 s. 178 and IR1986 reg. 4.187–4.194);
  3. ensure the winding up order halts any proceedings against the company, except by leave of the court (IA1986 s. 130(2)); and
  4. provide the Official Receiver with information, access to books or such other assistance as they may reasonably require.
31
Q

When would a company be struck off?

A

The Registrar of Companies is authorised by CA2006 s. 1000 to remove from the register companies that they believe are defunct (failure to file accounts and confirmation statements)

32
Q

Can a company be restored?

A

Yes - under CA2006 ss. 1024–8, application may be made to the Registrar by a former director or member of the company to restore the company to the register under an administrative restoration procedure

33
Q

When is a company dormant?

A

No significant accounting transactions as defined in CA2006 s. 1169 since the end of its previous financial year or, in the case of a newly incorporated company since its incorporation.

34
Q

Transactions that are disregarded for the purposes of assessing the company’s dormant status?

A
  • payment for shares taken by the subscriber(s) to the Memorandum and Articles;
  • fees paid to the Registrar of Companies; and
  • civil penalties imposed by the Registrar of Companies (i.e. late filing penalties).

Any other transactions required to be entered in the company’s accounting records will disqualify

35
Q

Certain words and expressions require consent before they may be used as part of a company name. Which of the following require consent?

A
  • French No
  • Accountant No
  • Britain Yes
  • Insurance Yes
  • Royal Yes
36
Q

Why must a public company apply for a certificate under CA2006 s. 761 before it starts trading?

A

To ensure that the amount paid up on the aggregate nominal value of its issued share capital is not less that the authorised minimum

37
Q

Does it matter to which Companies House office documents are delivered?

A

No, as any documents filed at one registry that relate to a company registered at another will be forwarded

38
Q

Is it sufficient to post documents to Companies House prior to the expiry of the appropriate filing period?

A

No – the requirement is that they must be received, and be acceptable for filing, prior to the deadline

39
Q

What is the comply or explain principle?

A

Listed companies should apply the principles of the UK Corporate Governance Code and explain any non-compliances with the provisions of the Code

40
Q

What are the five categories covered by the Governance Code?

A

Board Leadership and Company Purpose
Division of Responsibilities
Composition, Succession and Evaluation
Audit, Risk and Internal Control
Remuneration

41
Q

What is the benefit of acquiring at least 90% acceptances on a takeover?

A

Achieving the 90% threshold permits an acquiring company under the Companies Act 2006 to compulsorily acquire all remaining shares on the same terms if it wishes

42
Q

The City Code applies to what type of company?

A

All public companies or companies that have been public in the previous 10 years

43
Q

What is the significance of a share offer being conditional on reaching acceptance of 50%, 75% or 90% of the
issued shares?

A

These thresholds provide different degrees of control:
50% allows the holder to pass all ordinary resolutions and is treated as the holding company for accounting provisions

75% permits the passing of special resolutions as well as ordinary resolutions and gives control to the holder

90% is the level at which dissenters in a takeover can be compulsory acquired under procedures in the Companies Act 2006

44
Q

How long after ceasing to trade can an application for dissolution be made?

A

Three months

45
Q

What action might occur if the Registrar believes a company is defunct?

A

The Registrar will contact the company with a warning giving the company an opportunity to respond and to remedy any deficiency (e.g. overdue filings). If there is no response from the company or if the deficiencies are not remedied, the Registrar may take action to strike the company off the register and dissolve it

46
Q

Which of these activities disqualifies a company from being able to file dormant company accounts?

A

A late filing penalty being imposed on ABC Ltd, an authorised insurance company.
No

Payment for the amounts due on the subscriber share relating to XYZ Ltd.
No

A dividend being paid by a non-trading entity?
Yes

CCA (16 decks)

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