Possible Case Study Questions Flashcards
1
Q
Which section CA allows members to requisition a general meeting?
A
303
2
Q
What shareholding is required for a member to requisition a general meeting?
A
5% paid up capital
3
Q
What action must directors take following receipt of a valid general meeting requisition?
A
Convene a meeting within 21 days, to be held not more than 28 days after the notice of the meeting.
4
Q
When is a company required to circulate a member’s statement on a resolution?
A
If requested by:
- one or more shareholders holding at least 5% full paid voting capital
- not less than 100 shareholders holding shares on which there has been paid an average of not less than £100
5
Q
When may members place an item of business on the AGM?
A
If requested by:
- one or more shareholders holding at least 5% full paid voting capital
- not less than 100 shareholders holding shares on which there has been paid an average of not less than £100
6
Q
When must a member’s requisition be lodged with the company for an item of business at the AGM?
A
6 weeks before the meeting
7
Q
When must the company pay for circulation of a member’s statement or resolution?
A
If it is an AGM and issued 6 weeks prior to the meeting.
8
Q
When must the accounts be laid before general meeting and delivered to the Registrar for a public company?
A
Within 6 months of the end of the relevant accounting reference period (s442 CA)
9
Q
When must the accounts be laid before general meeting and delivered to the Registrar for a PRIVATE company?
A
Within 9 months of the end of the relevant accounting reference period (s442), although private companies do not need to hold general meetings.
10
Q
If a private company has elected to hold AGMs, when must the AGM be held?
A
Within 6 months of the end of the financial year.
11
Q
What is the consequence for late filing of accounts with the registrar?
A
A late filing penalty.
12
Q
How are late filing penalties calculated?
A
On a sliding scale according to how late they are.
13
Q
Which form must be filed with Companies House for a change of accounting reference date?
A
Form AA01
14
Q
What special type of accounts must parent companies file?
A
Group accounts complying with CA S 404
15
Q
What should group accounts contain?
A
- balance sheet got the parent
- consolidated balance sheet for the group
- consolidated profit and loss account for the group
- a full list of the subsidiary companies
16
Q
Which companies may file abridged accounts?
A
Small companies
17
Q
How are small companies defined?
A
Must meet two of the following:
- annual turnover less than £10.2 m
- balance sheet less than £5.1 m
- average number of employees less than 50
18
Q
What should abridged accounts contain?
A
- an abridged balance sheet
- a report of the directors
- an abridged profit and loss account together with supporting notes relevant for the small companies regime
- a conformation statement that the directors have complied with the relevant provisions of the CA.
- a statement of the members confirming unanimous consent for abridged accounts
19
Q
Whose consent is required in order to prepare abridged accounts?
A
Unanimous consent of all the members
20
Q
To who must copies of the accounts be sent?
A
All members
All debenture holders
Everyone entitled to receive notice of general meetings
21
Q
When must copies of the accounts be sent?
A
Delivered at least 21 days before the general meeting, or if the company must. If a private company does not hold general meetings, then no later than the end of the period for filing accounts and reports.
22
Q
Can members request a further copy of the accounts?
A
Yes, and the company must provide them within 7 days,
23
Q
Unlimited companies are typically exempt from filing accounts with companies house. When MUST they file accounts?
A
If it is:
- a subsidiary or parent of a limited company
- a banking or insurance company
- a qualifying company under the Partnerships and Unlimited Companies (Accounts) Regulations 1993
- operating a trading stamp schem
24
Q
What signatures are required on the various accounts?
A
Strategic report - CoSec on behalf of the board or a nominated director
Directors’ remuneration report - chair of RemCo
Directors’ report - CoSec on behalf of the board or a nominated director
Balance sheet - nominated director
Auditor’s report - senior statutory auditor
25
What are the benefits of using the Companies House Web Filing service?
- service provides reminder emails
- inbuilt templates and checks for errors
- file accounts to HMRC simultaneously
26
What is the liability of directors for false or misleading reports and accounts?
Liability to the company got any loss suffered for any untrue or misleading statement or omission. This requires the directors actual knowledge of inaccuracy or recklessness.
27
What is an off the shelf company?
One which has already been incorporated and has certificates of incorporation, memorandum and articles and a name.
28
What conditions must be met by a company name?
- not already on the index
- "limited/unlimited/plc" are only at the end
- not offensive
- use of the name is not an offence
- permission has been granted for any sensitive words
29
What is a business name?
A name other than the registered name under which a business trades.
30
When can the Registrar order a name change?
- within 12 months if too similar to an existing name (s67 CA)
- within 5 years of registration if misleading information was given (s 75 CA)
- at any time if use of the name is misleading and likely to harm the public (s 80)
31
When can an objection to a name be filed under s 69-74 CA?
If it has been registered "opportunistically", i.e. to extract money from a business who wishes to use that name
32
What is an action for passing off relating to names?
An action through the courts for rectification of a name where a person with goodwill has already registered a similar name
33
What documents must be filed on incorporation?
- IN01
34
What information must be entered into form IN01?
- address of registered office
- name and details of directors and secretary
- details of any alteration from the model articles
- capital of the company and its shareholders
- election to keep documents at companies house (optional)
- statement of initial significant control (PSC)
- statement of compliance from all subscribers to the Memorandum of Association
35
What is the purpose of form SH50?
Application by a public company for a trading certificate.
36
For what purpose does a public company require a trading certificate?
To commence business and to exercise borrowing powers
37
What are the consequences of a plc trading without a trading certificate?
Company and all its officers are liable to criminal proceedings.
38
What is the purpose of form AA01?
Change of accounting reference date.
39
What is the purpose of form SH01?
Return of allotments of further shares issued for cash.
40
What information is contained in the certificate of incorporation?
- the company's allocated registered number
- whether the company is public
- the date of incorporation (not the date of certificate issue)
41
What key matters should be dealt with by the company following incorporation?
- formalise any changes to directors/secretary
- obtain a seal
- hold board meeting
- file returns of allotments to registrar
- change accounting reference date
- obtain statutory registers
- organise headed stationary
- display company name at business location
- inform HMRC of the company
- arrange insurance
- consider changes to articles
42
What matters should be dealt with at the first board meeting of a company?
- appoint chairman
- appoint managing director
- appoint bankers
- appoint auditors
- determine accounting reference date
- approve the registration of subscribers' share transfers
- make any necessary allotments of capital
- approve share certificates
- appoint persons to represent the company at members/creditors meetings
- approve directors service contracts
- receive declaration of directors' interests.
- notify the registrar of the SAIL (if applicable).
43
Where must the company name be displayed?
- any place where business is carried on
- business letters
- notices and other publications
- all bills and cheques
- all invoices, recipients and letters of credit
- all company emails, faxes and websites
44
What is the process for re-registration from a private company to public?
- resolve any deficiencies such as insufficient capital, secretary, only 1 director etc.
- pass special resolution authorising change
- submit application on RR01 to registrar along with:
- copy of revised articles
- signed resolution
- copy of balance sheet + unqualified audit report
- written statement by auditor that the net assets are not less than the called-up share capital
- valuation report on any non-cash share consideration
- statement on RR01 confirming compliance
45
At what point does re-registration become effective?
When new share certificate is received.
46
What is the process for re-registration from public to private?
- board calls general meeting
- pass special resolution to re-register and alter the articles as needed
- issue resolution to Registrar within 15 days with form RR02 and statement of compliance
47
Who may object to a re-registration from public to private?
Members representing not less than 5% nominal value or 50 members may apply to the court for cancellation of re-registration within 28 days.
48
What improvements did the "Red Tape Challenge" make for simplifying company administration?
- remove need for annual return, replaced by confirmation statement
- allowing certain registers to be held at CH
- improvements to filing electronically
- remove need for directors consent to be appointed
- simpler reporting of statements of capital
- improved communication with companies by requiring the company to keep an email address up to date.
49
Which statute introduced the PSC register?
SBEE 2015
50
When did the need to maintain PSC registers come into force?
April 2016
51
What is a "person with significant control"?
A person meeting one of the 5 PSC conditions:
- owns, directly or indirectly more than 25% company shares
- holds, directly or indirectly, 25% or more company voting rights
- holds the right to exercise, or actually exercises, significant influence or control over the company
- holds the right, directly or indirectly, to appoint or remove a majority of board members
- holds the right to exercise, or actually exercises, significant influence or control over the activities of a trust or firm which meets a condition.
52
What scenarios are exempt from being a PSC?
- being a director
- an employee undertaking duties in the normal course of business
- important customers
- professional advisors
53
What information must be recorded about an in individual who is a PSC in the PSC register?
- full name
- service address and usual residential address
- date of birth
- usual country of residence
- nationality- date on which PSC became registerable and ceased
- nature of significant control
54
What information must be recorded about "registerable legal entity" who is a PSC in the PSC register?
- company name
- registered office
- legal form of the entity and governing law
- company registration number and the applicable registrar
- date on which RLE became registrable and ceased
- nature of the significant control
55
What steps should be taken if there are no PSCs?
A statement must appear in the PSC register that there are no applicable entries and that reasonable steps have been taken to identify any PSCs or RLEs
56
Does the "proper purpose" regime apply to PSCs?
Yes
57
What is a "registerable legal entity" for the purposes of the PSC register?
An entity that:
- would meet at least one of the conditions for being a PSC
- is the first such entity above the company in the chain of ownership
- is either required to keep its own PSC register or is subject to the disclosure requirements of a publicly traded company
58
What update should be made to the PSC register when a company is investigating who its PSCs are?
PSC register should be updated to include:
- statement that the company is in the process of carrying out an investigation
- details of any warning notices issued to suspected PSCs
59
When must a PSC notify the company that they have become a PSC?
Within one month of them reasonable having known that they have become registrable
60
Are listed companies required to maintain a PSC register?
No, as the provisions of the DTRs are considered sufficient to discharge this duty of disclose beneficial ownership.
61
Are overseas companies required to maintain a PSC register?
No, they are exempt.
62
What matters must the CoSec consider in maintaining the PSC register?
- consider who may be a beneficial owner of the company
- consider whether articles give particular rights to exercise significant control (e.g. a particular shareholder can appoint/remove all directors)
- brief board on PSC regime
- develop systematic and proactive approach to PSC management
- if private company, consider whether to keep PSC register centrally at CH, where all details will be available to the public
63
What statutory registers must be kept by every company?
- register of members
- register of charges
- minute books (company meetings / directors meetings / resolutions in writing)
- accounting records
- register of directors and secretaries
- register of PSCs
- register of interests disclosed (if public)
64
What is a SAIL, and what is its purpose (s 1136 CA)?
Single Alternative Inspection Location.
| A specified place, other than the registered office where companies may keep statutory registered for inspection.
65
Which documents may be kept at the SAIL for inspection?
- register of members
- register of directors
- directors' service contracts
- directors' indemnities
- PSC register
- register of secretaries
- register of resolutions
- contracts relating to purchase of own shares
- register of debenture holders
- register of interests in shares disclosed to public company
- instruments creating charges and register of charges
66
How many SAIL addresses may a company have?
1
67
Which legislation allows private companies to maintain certain registers with companies house?
Small Business, Enterprise and Enterprise Act 2015
68
Which registers may a private company elect to keep on the public central register?
- register of directors and secretaries
- register of directors residential addresses
- register of members
- register of PSCs
69
Which forms must be submitted to the registrar when a private company elects to store registers on the public central register?
EH01-EH05
70
For what two reasons should private companies carefully consider whether to keep certain registers centrally with Companies House?
1 Information is held publicly, including shareholders addresses and directors dates of birth
2 The proper purpose regime does not apply.
71
When may a traded company hold a general meeting with 14 days notice?
When a special resolution has been passed at the previous AGM authorising short notice (S 307A CA 2006)
72
What is the process for inspection of company registers of a private company?
- person wishing to inspect registers must give advanced notice and details of the time of inspection (between 9 and 3)
- the company must allow at least 2 hours for inspection
- notice period is 2 working days during a general meeting notice period, or 10 days otherwise
73
What is the process for inspection of company registers of a public company?
- plcs must make their records available for inspection for at least 2 hours every working day between 9 and 5
- no notice need be given to the company
74
What information must the register of members contain (s 113 CA):
- name and address of member
- date person became and ceased to be a member
- number and class of shares
- details if shares converted to stock
- share warrants
75
What additional requirement is placed on a company with more than 50 members regarding the register of members?
Must keep a separate index to be able to easily access the data.
76
What should be added to the register of members for a single member company?
Note that the company only has one member, and the date that the transaction took place.
77
Whose consent is required before a private company elects to keep registers centrally with Companies House?
Unanimous consent of the members.
78
What information must be provided to a company to satisfy the "proper purpose test" for inspection of the register of members?
- name and address
- purpose for which the information will be used
- whether the information will be disclosed to another (and their name, address and purpose)
79
What two courses of action may a company take on receiving a request to review the register of members?
- either permit the inspection within 5 working days or
| - apply to the court on the grounds that the proper purpose test has not been satisfied.
80
When should the register of members be amended for mistakes?
Only when the error is a minor clerical slip, and not for any material changes, or changes older than 3 months, or where a dividend has been paid.
81
Which companies must maintain a register of charges?
EVERY company, even if there are no charges to be entered.
82
Who may inspect the register of charges?
Any creditor or member free of charge, or any other person subject to a fee.
83
What information should be included in the register of charges?
Details of pre-April 2013 charges:
- description of property charged, or class of property in respect of floating charges
- amount of the charge
- names of persons entitled to charge
84
What minute books must every company maintain?
Minutes of every general meeting and board meeting.
85
Who should sign the minutes of meetings?
The chairman of the meeting
86
For how long must minutes be kept?
At least 10 years
87
Which companies are required to maintain a register of directors? (s 162 CA)
All companies
88
Which companies must maintain a register of secretaries (s 275 CA)?
All companies (even if they do not have a secretary)
89
What information must be contained within the register of directors and secretaries?
- name, including title
- country of residence
- nationality
- date of birth
- business occupation
- appointment/resignation dates
90
In what way does Companies House afford privacy to the directors of companies?
- directors may list their service address on the register of directors
- the separate register of directors addresses is private
- the "day" element of the date of birth is hidden
91
What is a PDMR and what must they notify to the company?
Persons Discharging Managerial Responsibility
| They must notify the company of any transactions in the securities of the company on a regulated market.
92
What information must a public company maintain in a
| "register of interests disclosed"?
Details of any responses received from shareholders under a s 793 investigation into who holds shares.
93
Who may inspect the register of interests disclosed?
Anybody, subject to the appropriate fee and proper purpose test.
94
When must a shareholder notify a listed company of their shareholding?
If it:
| - reaches, exceeds or falls below 3% or any subsequent percentage point
95
Are companies required to maintain a register of debenture holders?
No, but they may choose to do so.
96
When are shares deemed to have been allotted?
When the allottee gains the unconditional right to be entered into the company's register of members.
97
What is the process for allotment of new shares?
- check directors are authorised to allot
- check allotment is in proportion to members' existing holding
- send allotment application forms to those applying for shares
- process allotment application forms and payment
- board resolves to allot shares
- share certificates are prepared and issued with serially-numbered letter of allotment
- update register of members
- forms filed at companies house (including SH01)
98
What information should the resolution permitting directors to allot shares include?
- maximum number of shares to be allotted
| - date on which authority will expire (not more than 5 years from the date of the resolution)
99
In what 2 ways may shares be offered to existing shareholders (respecting their pre-emption rights)?
1 Provisional allotment letter - informs shareholders that shares have been provisionally allotted to them
2 Letter of rights inviting shareholders to apply for a specific number of shares
100
How may a company disapply pre-emption rights?
- company passes special resolution
- directors give a statement accompanying the notice that stating:
1 reasons for recommendation
2 amount to be paid
3 justification for that amount
101
How might a closely held company allot shares in a single day (rather than the process taking weeks)?
- convene board meeting to consider a form of application of shares already prepared by the shareholders
- convene a general meeting at short notice to give authority to allot
- receive consent to short notice from shareholders
- adjourn board meeting to hold general meeting
- hold general meeting and pass necessary resolutions
- reconvene board meeting for board to resolve the allotment
102
What additional step must listed companies take when proposing a resolution to grant the directors authority to allot shares?
Directors must provide a statement of:
- maximum amount of shares to be allotted, and what % of capital this represents
- whether they have any intention to exercise the authority
- when authority will lapse
103
What restriction is placed on public companies allotting shares? (578 CA)
- must be subscribed in full
| - offer must include terms that the allotment will be carried out in any event (e.g. if the shares are under subscribed
104
What is meant by a "letter of renunciation"?
Allottees may renounce shares to someone else by completing a letter of renunciation.
105
What Listing Rules apply to letters of renunciation?
- form of renunciation must appear on the back of the allotment letter
- allottees must be given the facility to split their renunciation
- renuncuation period must not exceed six weeks for fully paid shares, and one month for partly-paid.
106
When may a public company allot shares for non-cash consideration?
When valued by an appointed independent valuer within 6 months prior to allotment.
107
What must the valuer's report contain?
- nominal value of shares
- amount of any premium payable on the shares
- consideration valued and the method used to value it
- the amount of the nominal value of the shares and any premium treated as paid up for the consideration
108
When are public companies exempt from the requirement to have non-cash share considerations valued?
When shares are being exchanged during a takeover bid.
109
What is the consequence of failing to meet a call on unpaid shares?
Risk of forfeiture
110
What is the process for allotment of shares in a rights issue?
- check directors have authority to allot shares (ordinary resolution)
- directors resolve to increase capital by rights issue
- if listed, issue a prospectus
- determine date at which register of members is considered up to date
- issue letters of renunciation
- give at least 14 days for shareholders to accept
- directors resolve to allot shares
- update register of members
- prepare share certificates and issue
- file SH01 with registrar within one month
- file copies of resolutions within 15 days
111
What must directors disclose if they own shares in their company?
They must disclose their interest in those shares, to be included in the register of director's interests.
112
What is a non-executive director?
A member of the board of the company who does not have any executive responsibilities.
113
Is an NED considered to be an employee?
No.
114
Is an NED liable in the same way as an ED?
Yes, both are de facto directors and so have the same liabilities.
115
Which groups of people might make good NEDs?
- EDs of other companies
- NEDs of other companies
- those with professional qualifications (e,g, solicitor)
- those with government experience (politicians, senior civil servants)
- those with industry-relevant experience
116
According to the UKCGC what are the criteria affecting independence of an NED?
- employee in last 5 years
- material business relationship with the company in last 3 years
- receives additional remuneration
- participates in share plan, performance-related pay, or pension schemes
- has close family ties to a director, advisor or senior employee
- holds cross-directorships with significant links
- represents a significant shareholder
- has served for more than 9 years
117
What is a corporate director?
A legal entity such as a company holding a directorship of a company.
118
A new S156B CA 2006 is yet to come into force, giving limitations to the use of corporate directors. What will be the likely exemptions?
- for subsidiary companies
- where there is a low risk of illicit activity
- if all the directors of the corporate director are natural persons
119
What is the main purpose of the AGM?
- to allow directors to report on the performance of the company
- for the members to question the directors.
- for members to vote on resolutions
120
What routine business is usually addressed at the AGM?
1 Receive report and accounts (s 437 CA)
2 For listed companies, approve directors' remuneration policy
3 Declare the final dividend
4 Elect directors who were appointed since the last AGM or are required by Articles (rotation)
5 Appoint, or reappoint, auditors and approve their remuneration
121
How often must the directors' remuneration policy be submitted for shareholder approval?
Once every 3 years
122
Other than routine business, what other business is commonly dealt with at the AGM?
- special resolutions to alter articles
- authority to issue capital
- disapplication of preemption rights
- authority to repurchase own shares
- adoption of employee share schemes
- approval of political expenditure
- if listed, approval for 14 days notice for general meetings (NOT AGM)
123
What checks should the CoSec make in planning the AGM?
- check compliance with 21 days clear notice
- check date is not more than 6 months from end of accounting period (plc)
- check whether notice period complies with UKGCG (if listed)
- check other events on chosen date
- check venue is booked
- check board has agreed to convene meeting
- check annual report and accounts are printed
- inform interested parties (auditors, creditors)
- if listed, does documentation comply with listing rules and UKGCG
124
If a plc files AA01 to shorten its accounting period, what must it then do within 3 months?
Hold an AGM
125
What information should be included in notice of general meetings?
- date, time and place
- whether it is an AGM or other general meeting
- summary of business to be transacted
- full text of special resolutions
- details of any special notice
- explanation of member's right to appoint proxies
- name and signature of secretary
- any explantory notes
126
Whose consent is needed to authorise short notice of a PLC AGM?
All members entitled to receive notice
127
Whose consent is needed to authorise short notice of a PLC general meeting (other than an AGM)?
95% of members entitled to attend
128
Whose consent is needed to authorise short notice of a private company general meeting?
90% of members
129
What must listed companies include in any shareholder circular, including general meeting notices?
- clear and adequate explanation of subject matter, including enough information for shareholder to be sufficiently informed
- notice drawing members' attention to the importance of the document, and suggesting they seek independent advice if in doubt
- a voting recommendation from the directors
- notice advising that if shares have been sold or transferred, the notice should be passed to the new holder.
130
What are the three requirements of the UKGCG with reference to AGMs?
- issue notice of AGM with 20 working days notice
- make constructive use of the AGM
- publish proxy figures
131
What changes did the EU Shareholder Rights Directive make to Listed Company general meetings?
- minimum notice for general meetings increased from 14 to 21 days unless:
- company offers electronic voting to all shareholders
- shareholders have passed a special resolution to receive short notice (min 14 days)
132
What information rights do members have?
- inspect and request copies of statutory books
- inspect directors service contracts or request copy
- receive copy of company constitution
- receive copy of account at least 21 days prior to the general meeting at which they will be presented
- recieve copy of latest accounts
- inspect minutes of general meetings and request copies
- attend general meetings and ask questions
133
Other than information rights, what other rights do members have?
- unfair prejudice petition (s 994 CA)
- member's application for winding up
- derivative claim on behalf of the company
- voting at general meetings
- requisition a general meeting
- member's audit report
- compulsory acquisition
- share certificate
134
What is a member's right to petition the court for unfair prejudice?
Under s 994 CA, a member may petition the court for relief where they consider that an act of the company could result in an unfair prejudice of their interest.
135
What is a member's right to apply for a winding up?
Where directors of the company can make a statutory declaration of solvency, members may resolve to liquidate the company
136
What is a member's right to a derivative claim?
A member may, on behalf of the company, bring a claim against a director for an actual or proposed act or omission involving negligence, breach of duty, or breach of trust.
137
In a member's derivative claim, the member must establish a prima facie case against a director. When will the court not give permission to proceed?
- a person acting accordance with the s 172 directors duty would not seek to continue the claim
- the act or omission has been authorised by the company
138
What factors will the court take into account when determining whether a member's derivative claim may proceed?
- views of other independent shareholders
- whether the claimant is acting in good faith, and would bring the claim in their own name
- whether the subject of the claim is likely to be authorised by the company
- the importance of the claim to a person responsible for promoting the success of the company
- if the company has not decided to bring the claim
139
What is a member's right to an audit report?
When a company is exempt from audit, members holding at least 10% nominal value may require the company to obtain an audit
140
What is a member's right to compulsory acquisition?
When a shareholder has acquired 90% of shares, in a company, they may require the remaining shareholders to sell their shares.
141
What is a member's right to a share certificate?
A member is entitled to receive a share certificate in respect of their holding.
142
Who may demand a poll at a general meeting?
- the chairman
- at least 2 persons with voting rights
- persons representing not less than 10% of voting rights
- persons representing not than 10% share capital
143
What are the three methods for voting on a poll?
- voting lists - i.e. two sheets
- ballot papers
- electronic voting
144
How does electronic voting work at general meetings?
Shareholders are given hand-held devices which they use to cast votes. The device records how many votes they have. Poll results appear on a large screen in the room.
