Company Law: (1) Different business models and introduction to companies

Partnerships: Terms of PA 1890: what section deals with remuneration, saying partners are not entitled to a salary

s.24(6)

Introduction to Company Procedure: In the normal course of events, the process of holding a GM called by the board will involve _ distinct stages; what

4; BM, GM, BM, Post meeting matters (PMM)

Resolutions: Shareholders: Special: Under s 283(1) CA 2006 a special resolution requires a majority of not less than what %

75%

Introduction to Company Procedure: Section 307(5) CA 2006 provides that, for a private company, a GM may be called on short notice if this is agreed to by a majority in number of the members who together hold shares with a nominal value of not less than _% of the total nominal value of the shares which give the right to attend and vote at the GM

90%

Companies: Type: Principal differences between a private and a public company (6)

name; share capital; number of directors; company secretary; annual general meetings; regulation

Companies: Type: Principal differences between a private and a public company: share capital: _ _ for a private company to have any specified minimum amount of share capital; a public company must have a share capital with a nominal value of at least what; what sections

no requirement; £50,000; s.586 and s.763 CA 2006

Companies: Who's who: who are the managers of the company, involved in day to day running of the company and are collectively known as the Board

Directions

Resolutions: Shareholders: show of hand: each shareholder present at the meeting entitled to _ vote; when voting on a poll, every shareholder has one vote in respect of what

one; each share held by him

Companies: Who's who: who are also known as member, are owners of the company, invest money in return for shares and possibility of dividends and are not involved in day to day management but usually have voting rights and control key decisions

Shareholders

Resolutions: Shareholders: according to s 318(2) CA 2006 the quorum required for a GM is _ qualifying persons

2

Limited Partnerships (LP): Key Characteristics: a LP has _ different types of partners; who

2; limited partners, general partners

Companies: Key Characteristics: there were over how many private limited companies registered with Companies House in 2018

3 million

Constitutional Documents: date that CA 2006 came into force, prior to this companies were governed by principles of which act; this required companies to have which two constitutional documents; under what section does the memorandum no longer form part of the company's constitution

1 Oct 2009; CA 1985; the Articles of Association and the Memorandum; s.17 CA 2006

Shareholders: Appointment of Directors: CA 2006 does not stipulate a procedure for the appointment of directors, and the MA deals with the matter in Art _; Any person who is willing to act as a director, and is permitted by law to do so, may be appointed to be a director by which two ways; the _ of these two procedures is easier to put into effect than the other, so it is usual for this route to be taken

17(1); by ordinary resolution, by a decision of the directors; second

Companies: Key Characteristics: Companies are governed by the Companies Act 2006 which superseded the Companies Act of what year

1985

Companies: Type: Principal differences between a private and a public company: No of directors: private needs only _; public must have a minimum of _

1; 2

Amending the Articles of Association: the basic rule in the case law is that, to be valid, any alteration must be made bona fide in the interests of the company as a whole as per which precedent; in what case did the court hold an amendment to the Articles is not valid if no reasonable man could consider it to be for the benefit of the company.

Allen v Gold Reefs [1900]; Shuttleworth v Cox [1927]

Companies: Type: Public: only public companies can be _; what does this mean

listed; admitted on a regulated investment exchange such as the LSE

Resolutions: Directors: Board Resolutions: what provides that any decision of the directors can be made by majority decision at a meeting of the directors

Art 7(1) MA

Resolutions: Directors: Board Resolutions: in companies with only one director, the sole director can take decisions on his own, laid out in what Art

Art 7(2) MA

Introduction to Company Procedure: which Art gives the directors flexibility in regulating their meetings, providing that any director may call a BM or require the company secretary (if the company has one) to do so at any time.

Art 9 MA

Introduction to Company Procedure: Notice: in what case did the court hold that reasonable notice of the BM was necessary, and that this would be whatever notice is usual for the directors to give

Browne v La Trinidad [1887]

Limited Liability Partnership (LLP): Key Characteristics: introduced by what Act

Limited Liability Partnership Act 2000 (LLPA 2000)

Limited Partnerships (LP): Key Characteristics: governed by which act; LPs must be registered at what; but have no requirement to do what

Limited Partnership Act 1907; Companies House; file accounts

Companies: Type: Principal differences between a private and a public company: name of a private company ends in what; name of a public company ends in what

Ltd; Plc

Limited Liability Partnership (LLP): Key Characteristics: the organisational structure of an LLP is very flexible and should be decided between the partners in a formal written what; in the absence of any such agreement what contains default provisions

Members' Agreement; Regulations 7 and 8 of the Limited Liability Partnerships Regulations 2001 (SI 2001/1090)

Partnerships: Existence: case which showed that if there is an agreement to share losses as well as profits, this makes the existence of a partnership more likely; in what case was it shown that if a person is not being 'held out' as a partner then this makes the existence of a partnership less likely

Northern Sales (1963) Limited v Ministry of National Revenue (1973); Walker v Hirsch [1884]

Legal effect of the Articles of Association: Although the courts have acknowledged that the forerunners to s.33 CA 2006 provide that the Articles constitute a contract between the members themselves, as well as between the company and its members, there is conflicting authority as to whether one member may enforce the Articles against another member directly as in what case; or only through the company itself, ie by requiring the company to enforce the provisions against the member as in what case

Rayfield v Hands [1960]; Welton v Saffery [1897]

Amending the Articles of Association: Case law examples: The amendment of a company's articles to permit the shares of a minority shareholder to be compulsorily acquired under a takeover offer was held to be valid as it was consistent with the terms of a shareholders' agreement. It was not open to challenge on other grounds such as unfair prejudice. The Court of Appeal held that the amendment was no more than a 'tidying up exercise' which had been consistent with the initial bargain of the founding members, which included the appellant himself. In the absence of any finding of bad faith, improper motive or irrationality, there was no basis for the challenge to the validity of the amendment.

Re Charterhouse Capital Ltd [2015]

Articles of Association: a company effectively has 3 choices as to the form of its articles

model articles (MA)/Table A; Amended MA; Tailor-made Articles

Amending the Articles of Association: Case law examples: the defendant company had altered its articles by introducing a provision which gave the directors power to buy out, at a fair price, the shareholding of any member who competed with the company's business. The plaintiffs, who were minority shareholders and who carried on a competing business, unsuccessfully challenged the validity of the alteration. The Court of Appeal found that the alteration was initiated in good faith and bona fide in the interests of the company and therefore allowed this to stand to protect the company.

Sidebottom v Kershaw, Leese & Co Ltd [1920]

Companies: Type: Private: what company is rare, and the liability of the members is unlimited

Unlimited companies

Shareholders: Shares: often described as what; most common type; shares in a limited company having a share capital must have a fixed what; (3) common nominal values for ordinary shares; the nominal (or 'par') value of a share is the _ _ _ for that share; it represents a unit of _ rather than the actual value of the share; if a share is allotted/issued at more than its nominal value, the excess is known as what

a bundle of rights; ordinary shares; nominal value; 1p, 5p, £1; minimum subscription price; ownership; premium

Companies: Type: Listed: to enable a company to raise greater funds by offering shares to the public at large, a private company's shareholders may decide to convert the company into what; after converting to Plc status, a company may seek a listing of its shares on a _ _

a public limited company (Plc); stock exchange

Limited Liability Partnership (LLP): Key Characteristics: key difference between LLPs and sole traders, partnerships or LPs is that an LLP has what; this means what; however for tax purposes it is treated as what; referred to as what

a separate legal personality; it can own property and enter into contracts on its own behalf; a partnership; tax transparency

Limited Liability Partnership (LLP): Key Characteristics: LLPs are in effect a hybrid between what; many _ and _ firms are LLPs

a traditional partnership (with procedural flexibility) and a company (with limited liability); law, accountancy

Resolutions: since a company is an _ person, it is unable to make decisions or carry out company business itself; Instead, decisions are made on behalf of the company by its _ and its _; secisions of the directors are taken by passing Board Resolutions in what; decisions of the shareholders are taken by passing Shareholder Resolutions, either in a meeting of the shareholders (referred to as what) or in writing; types of shareholder resolution (2)

artificial; directors, shareholders; Board Meetings (BM); General Meetings (GM); ordinary resolutions, special resolutions

Limited Liability Partnership (LLP): Key Characteristics: all partners in a LLP have _ liability

limited

Partnership Agreements: it is important in a modern partnership that partners seek legal advice and enter into a _ partnership agreement governing the terms of their relationship; partners will wish to vary the default provisions of PA 1890 as these are not suitable for a _ business; typically, a partnership agreement will deal with which key principles as well as other more practical details (5)

binding; modern; profit sharing ratio, salaries, decision-making, what happens when a partner leaves the partnership, how new partners may be appointed and how partners may be removed

Introduction to Company Procedure: GMs: It is the _ responsibility to convene (ie call) general meetings. The board must decide when the GM is to take place; Section 307 CA 2006 prescribes minimum notice periods for GMs, for private companies, _clear days' notice is required for the calling of a GM

board's; 14

Resolutions: Directors: Board Resolutions: In the event of a deadlock, Art 13 MA provides that the _ of the BM will have a casting vote; this person is chosen by the directors from amongst themselves under which Art

chairman; Art 12 MA

Key considerations when forming a business (6)

cost; risk; structure; formalities; privacy; finance

Legal effect of the Articles of Association: Rayfield v Hands: the particular facts suggest that, if a member accepts a personal obligation to another member through the Articles (eg to transfer shares), that member can _ the right against the other member directly; if a member is likely to wish to enforce rights against other members, he/she should be advised to enter into a _ _

enforce; shareholders' agreement

Amending the Articles of Association: Section 22 CA 2006 permits the _ of specific provisions within a company's Articles, though this occurs relatively rarely in practice; an entrenched provision of a company's Articles is one which can only be amended or repealed if _ _ are met, or if procedures more restrictive than a special resolution are complied with

entrenchment; specific conditions

Shareholders: Types of Directors (5); a key point to understand is that all of these directors owe the _ _ to the company and are subject to the same responsibilities under CA 2006 and also under the insolvency legislation (Insolvency Act 1986); which director is considered an employee of the company

executive director, non-executive director, shadow director, alternate director, de factor director; same duties; executive

Limited Partnerships (LP): Key Characteristics: LPs are not commonly used for general business but often used for what; they are popular joint venture business structures where an investor (limited partner) puts money into a business run by who

investment vehicles; the general partner

Shareholders: Shares: The total amount in value (nominal and premium) of all shares in issue at any time is known as what; it is not always necessary for shareholders to pay the full amount due on their shares immediately and the amount paid is known as what

issued share capital; paid-up share capital

Shareholders: what term refers to any individual (ie human being) who: owns more than 25% of the shares or voting rights in the company; has the power to appoint or remove a majority of its board of directors; or otherwise exercises 'significant influence or control' over the company; every company must maintain a _ of its PSCs, and this register must be open to public inspection (see ss 790A - 790ZG CA 2006); the intended purpose of this is to increase _

persons with significant control (PSC); registers; transparency

Companies: Who's who: what does PSC stand for; in general, PCGs are shareholders with over _ of shares

persons with significant control; 25%

Companies: Type: Private: what company has no share capital, the liability of members is limited to the amount that they agreed to contribute in the event of a winding up, membership is not transferable and they are relatively rare

private companies limited by guarantee

Companies: Type: Private: what company is the most common type, has no minimum share capital requirements, is prohibited from offering shares to the public and can be formed by one person

private company limited by shares (Ltd)

Limited Partnerships (LP): Key Characteristics: note that on 6 April 2017 a new sub-category of limited parterships, called what, was created

private fund limited partnerships

Companies: Type: Public: what type of company can offer their shares to the public, need a minimum of 2 directors, have a minimum share capital requirement of £50,000 (s763 CA 2006) and requires a trading certificate before it can trade (s761 CA 2006)

public companies limited by shares (Plc)

Resolutions: Directors: Board Resolutions: The number of people required to attend a meeting in order for the meeting to be valid is known as the what; if a sufficient number of people attend the meeting then the meeting is said to be what

quorum; quorate

Memorandum: For older companies that were incorporated under the CA 1985, what section provides that any provisions in a memorandum must be treated as provisions of the company's Article; under CA 2006, therefore, the objects clause of an older company continues in force, operating as a _ on that company's capacity unless and until the Articles of that company are amended to remove its objects clause.

s 28 CA 2006; limitation

Shareholders: membership begins when the member's name is entered into the company's register of members, which sections; the first shareholders of the company are its _ under s.8

s.112(2); subscribers

Shareholders: Number and nature of directions: what sections says that a private company must have at least one director and a public company must have at least two directors.

s.154

Articles of Association: what section requires all articles to have this as it forms the main constitutional document of a company; what is their purpose

s.18 CA 2006; to regulate the relationship between the shareholders, the directors and the company

Partnership Agreements: what section says that the partners' mutual rights and obligations can be varied at any time by their unanimous consent

s.19 PA 1890

Limited Liability Partnership (LLP): Key Characteristics: what section states that two or more persons associated for carrying on a lawful business with a view to profit can incorporate an LLP. A 'person' in this context can be a company as well as an individual.

s.2(1)(a) LLPA 2000

Amending the Articles of Association: Once a company has adopted Articles, it is able to alter them at any future date by special resolution under what section; a special resolution is the decision of who

s.21(1); the shareholders

Partnerships: Terms of PA 1890: in what section is profits and losses, which says that: partners are entitled to share equally in the profits of the business, and must share equally in the losses of the business, even where the parties have contributed to the capital unequally.

s.24(1)

Partnerships: Terms of PA 1890: what section deals with decision-making, saying that: decisions arising during the ordinary course of the business are decided by a majority, except for any change to the nature of the partnership business which requires unanimity.

s.24(8)

Partnerships: Terms of PA 1890: what section deals with expulsion, saying: a partner cannot be expelled by majority vote unless all of the partners have previously expressly agreed that a majority can do this.

s.25

Companies: Type: Principal differences between a private and a public company: Company Secretary: a private company may choose one but it is not obliged, which section; a public company must have one, which sctions

s.270(1); s.271

Resolutions: Shareholders: Ordinary: An ordinary resolution of the members of a company means a resolution that is passed by a simple majority (more than 50% of votes are cast in favour of the resolution) under what section

s.282(1) CA 2006

Legal effect of the Articles of Association: what section sets out the nature of the contact established by the Articles of a company, which provides that the provisions in the company's Articles bind the company and its members to the same extent as if there were covenants on the part of the company and each member to observe those provisions.

s.33(1)

Companies: Type: Principal differences between a private and a public company: AGM: a public company is required to have at least one each year, but a private company is no longer required, what section

s.336

Companies: Type: Private Limited company: which section states that 'a private company is any company that is not a public company'; which section states that private companies' names end with the word 'Limited' or 'Ltd'

s.4(1); s.59(1)

Companies: Type: Public Limited company: which section states that a 'public company is a company...whose certificate of incorporation states that it is a public company'; which section states that a public company's name ends with the words 'Public Limited Company' or 'Plc'

s.4(2); s58(1)

Shareholders: Allotment: defined where; shares are said to be allotted when a person acquires the _ right to be included in the company's register of members in respect of those shares; the term allotment is often used interchangeably with what, even though they have different meaning; there is no _ _ of issue

s.558; unconditional; issue; statutory definition

Partnerships: Formation: which defines a partnership as '...the relation which subsists between persons carrying on a business in common with a view to profit'; what contains a list of rules for determining the existence of a partnership

s1(1) PA 1890; s2 PA 1890

Companies: Key Characteristics: the key point is a company is a what; which means companies are _ from their owners; this means that what; profits and losses belong to the company and not the shareholders and it is the company that is therefore _ for its own debts, not the shareholders

separate legal entity; distinct; company owns property, enters into contracts and can sue and be sued in its own name; liable

Sole Traders: Key Characteristics: no _ _ costs; a sole trader is not a _ _ entity; unlimited _ _; no _ structure; no Companies House filing or _ _ for running the business; complete _

set up; separate legal; personal liability; formal; procedural requirements; privacy

Partnerships: Key Characteristics: no _ _ costs; a partnership is not a _ _ entity; unlimited _ _; no _ structure; no Companies House filing or _ _ for running the business; complete _; partnerships are governed by the provisions of what

set up; separate legal; personal liability; formal; procedural requirements; privacy' the Partnership Act 1890

Resolutions: Shareholders: may vote at a GM in which ways (2)

show of hands, poll

Limited Partnerships (LP): Key Characteristics: Limited partners are often called what; they have _ liability; must not be involved in what

sleeping partners; limited; the management of the business

Business models (4)

sole trader; partnership; limited partnership; limited liability partnership

Companies: Who's who: what is the name given to the first shareholders in a company who invest in the company when it is initially set up (incorporated)

subscribers

Articles of Association: The Articles must comply with the minimum provisions of CA 2006, known as what

the Legality Test

Articles of Association: there are some CA 2006 provisions which override anything in a company's articles, an example being what; section

the right to demand a poll vote at a general meeting; s.321

Resolutions: Directors: Board Resolutions: Art 8 MA makes provision for directors to make decisions, by what, without having to hold a BM

unanimous agreement

Limited Partnerships (LP): Key Characteristics: General partners have _ liability; they _ the business

unlimited; run

Companies: Key Characteristics: the liability of shareholders is limited to the amount _ on their shares (if any); this _ shareholders and facilitates investment

unpaid; protects

Shareholders: Where company A owns all the shares in company B, company B will be a _ _ _ of company A; what section gives the definition of a subsidiary

wholly owned subsidiary; s.1159

Resolutions: Under s 281 CA 2006, private companies may also pass a shareholders' resolution without holding a General Meeting by using the _ _ procedure (subject to s 288 CA 2006); what are two resolutions that may not be passed as written resolutions

written resolution; removal of a director, removal of an auditor