PIC & MOI Flashcards
(37 cards)
What is a pre-incorporation contract?
A contract entered into by a person acting on behalf of a company that does not exist, with the intention that the company will be bound by it once incorporated.
What difficulties arise with pre-incorporation contracts?
Before incorporation, the company is not a legal person, and a person cannot act as an agent for a non-existing principal.
How can a promoter secure a contract before the incorporation of a company?
A promoter may:
* Enter into the contract in their own name
* Use common law stipulatio alteri
* Conclude a pre-incorporation contract under s 21 of the Companies Act of 2008.
What is stipulatio alteri?
A common law contract for the benefit of a third party, where the promoter acts as a principal.
What happens when the company accepts the benefits of a stipulatio alteri?
The company must also accept all consequent obligations and terms of the contract.
True or False: A promoter is personally liable if the company does not accept the contract.
False.
What is the statutory solution provided by Section 21 of the Companies Act of 2008?
It allows persons to contract on behalf of non-existent companies and enables companies to ratify such pre-incorporation contracts.
What is required for a pre-incorporation contract under Section 21?
The contract must be in writing.
What is ratification in the context of pre-incorporation contracts?
Once the company is incorporated, it may ratify the pre-incorporation contract, making it enforceable.
What happens if the company fails to ratify a pre-incorporation contract within three months?
The company is deemed to have ratified the contract.
What are unalterable provisions in the context of a Memorandum of Incorporation?
Provisions that cannot be altered by the company’s MOI and are mandatory for all companies.
What are alterable provisions?
Provisions that may be negated, restricted, or altered by the company’s MOI.
What does Section 13 of the Companies Act of 2008 require for company incorporation?
A Memorandum of Incorporation (MOI) must be completed, signed, and filed.
What does the MOI outline?
The rights, duties, and responsibilities of shareholders, directors, and other matters related to the company.
What is the significance of the term ‘RF’ in a company’s name?
It indicates that the company has restrictive conditions or prohibitions on the amendment of the MOI.
What must the Notice of Incorporation include if the MOI has restrictive conditions?
A prominent statement drawing attention to each restrictive provision.
What is the time frame for ratifying or rejecting a pre-incorporation contract under common law?
There is no specific time frame; it is determined by the contract.
Under Section 21(2), when is a promoter jointly and severally liable?
If the company rejects any part of the pre-incorporation contract after incorporation.
What must the Notice of Incorporation contain if the MOI has restrictive conditions?
A prominent statement drawing attention to each restrictive provision and its location in the MOI
The term ‘restrictive conditions’ is not defined by the Act, allowing for various interpretations.
What does ‘RF’ stand for in a company name?
Ring-fenced
How may a Memorandum of Incorporation be amended according to Section 16?
- Court order
- Alteration of share provisions by the board of directors
- Special resolution (75% of those with voting rights)
What is the minimum percentage of voting rights required for a special resolution?
75%
Can the MOI be altered through an ordinary resolution?
False
Who can propose an amendment to the MOI?
The board of directors or shareholders holding at least 10% of the voting rights
