Topic 4 - Company formation

Question 1

When is it appropriate to lift the veil of incorporation?

Answer 1

• produce a tax liability
• entitlement to compensation
• reveal the member’s true national identity
• breakdown of a quasi- partnership
• evasion of existing contractual obligations

Statute
* director is disqualified
* plc trades without a trading certification
* fraudulent or wrongful trading

Question 2

Public vs Private

Answer 2

Page 85-86

Question 3

Formation documents

Answer 3

• memorandum of association (historic record of first shareholders - why you want to form company and agree to takeat least on share each)
• application for registration
• articles of association
• statement of capital and intial shareholdings
• statement of guarantee (only for companies limited by guarantee)
• statement of proposed officers (first director and first secretary)
• statement of compliance

Question 4

Company name change

Answer 4

• special resolution (75% or more)
• notifying the Registrar
• new certificate of incorporations is issued but only to reflect the name change

Question 5

Articles of assocation change

Answer 5

• alter its articles by passing a special resolution
• certain changes are not binding on all members (forcing a memebr to purchase more shares or increase their liability)
• amended copy sent to Registrar within 15 days

Question 6

Administration documents

Answer 6

• accounting records must be kept for 3 years (Ltd) and 6 years (plc):
• annual records
• directors report
• directors remuneration report (quoted companies only)
• auditors report
• confirmation statement (no more then 12 months between submissions)
• strategic report
• companies miscellaneous reporting regulations 2018
• Energy and Carbon Report

Question 7

Company Size

Answer 7

Turnover:
* <632k
* <10.2m
* <36m

Balance Sheet:
* <316k
* <5.1m
* <18m

Employees:
* <10
* <50
* <250

Micro, Small, Medium

Question 8

Audit appointment

Answer 8

• appointed at end of finanical year by the directors or by members passing an ordinary resolution (50%+)

Question 9

Company secretary

Answer 9

• a plc must appoint a suitably qualified secretary but private company may choose to
• if Ltd chooses to appoint, the secretary can also be a sole director of the company
• a plc requires at least two directors, one of which can also be the company secretary

Question 10

How long do resolutions and meeting minutes need to be kept?

Answer 10

10 years

Question 11

Off the shelf companies

Answer 11

• changes may need to be made to the company name
• may need to change articles of association
• need to transfer original subscribers shares to new members
• names of directors need to be chnaged

Question 12

Directors report

Answer 12

• names of directors
• principal activites of the company
• statement that the auditor is unaware of any relevant audit info

Question 13

Auditors report

Answer 13

• identify the accounts auditied and financial reporting framework applied
• scope of audit
• auditors opinion
• statement that directors report is consistent with the accounts

Question 14

Confirmation statement

Answer 14

• addresses of the company’s registered office
• addresses where register of debenture holders is kept
• type of company and principal business activites
• particulars of members of the company
• changes in people with significant control
• particulars of directors
• number of shares in each class