Company Law Basics

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Questions and Answers

What is the earliest date a general meeting can be held if notice is emailed on Tuesday 5 January?

Saturday 16 January

Thursday 21 January

Friday 22 January (correct)

Friday 15 January

What percentage of shares is required for a majority consent to short notice?

50%

75%

100%

90% (correct)

What qualifies as a substantial transaction according to the content?

Any sale or purchase regardless of value

Transaction value over £5,000 and >10% of net asset value

Transactions exceeding £100,000 in value

A combination of both B and C (correct)

Who is considered connected to a director?

A member of a director's family or anyone in an enduring relationship with the director Signup and view all the answers

What is needed for the board to enter into a substantial property transaction?

Consent of shareholders by ordinary resolution Signup and view all the answers

How can a company change its name?

By special resolution or mechanisms outlined in the company's articles of association Signup and view all the answers

What must be done after a company changes its registered name?

Send a copy of the special resolution and amended articles to the Registrar within 15 days Signup and view all the answers

What percent of shares must a director or connected person own to fall under the definition of 'connected'?

20% Signup and view all the answers

What form must be sent to change a company's registered name?

A prescribed form along with the special resolution and fee to the Registrar Signup and view all the answers

What is the time frame for sending the copy of the special resolution to the Registrar after amending the articles?

Within 15 days Signup and view all the answers

What does a personal guarantee from a client imply?

The client will be liable personally. Signup and view all the answers

Which of the following is true regarding company secretaries?

It is optional for a company to have a company secretary. Signup and view all the answers

What is true about a shareholder’s liability?

Shareholders are liable only for fully paid shares. Signup and view all the answers

What can make directors personally liable for company debts?

Trading recklessly or wrongfully. Signup and view all the answers

What must be submitted with the application for registering a company?

The memorandum of association. Signup and view all the answers

What must be done within 14 days of appointing a new director?

Send form AP01 to the Registrar of Companies. Signup and view all the answers

Which statement is true regarding a director's personal interest in a resolution?

The director cannot participate in any way if the interest is declared. Signup and view all the answers

Which statement describes the legal personality of companies?

Companies are treated as separate legal entities. Signup and view all the answers

What happens if a company does not adopt model articles?

It must submit its own articles of association. Signup and view all the answers

In a partnership where C retires, who remains liable for debts incurred before the retirement?

A, B, and D, because actual notice was not given to the supplier. Signup and view all the answers

Who owns a company’s assets in the context of legal personality?

The company itself owns the assets. Signup and view all the answers

Under what circumstance can the provisions of MA 14 be disapplied?

If there is a board resolution to that effect. Signup and view all the answers

What action is necessary when appointing a new director by board resolution?

Issue and hold a vote during a board meeting. Signup and view all the answers

What happens if a partner acquires another partner's share without notifying suppliers?

All partners remain liable for existing debts until notice is given. Signup and view all the answers

If a supplier has been dealing with a partnership for several years, how does this affect liability after a partner retires?

The retired partner may still be liable due to previous dealings. Signup and view all the answers

What does it mean if an action is ultra vires regarding a company employee's actions?

The employee acted beyond their authorized capacity. Signup and view all the answers

What must be established for a partnership to be bound by a transaction entered into by a partner?

The other party must have been aware of any limitations on the partner's authority. Signup and view all the answers

Under what condition can partners be held liable for debts incurred after their retirement?

If they do not notify parties of their retirement. Signup and view all the answers

What is required of the other party in the context of a partner's authority for the partnership to be bound?

The other party must have believed that the partner was acting within their authority. Signup and view all the answers

If a partner lacks actual authority but the other party believes they have it, what is the partnership's liability?

The partner is personally liable for the transaction. Signup and view all the answers

Which of the following statements accurately reflects a principle of partnership liability?

Retired partners retain liability under specific conditions. Signup and view all the answers

What is required for a partner to not be liable for debts incurred after retirement?

Failing to give appropriate notice to the supplier Signup and view all the answers

What constitutes actual notice to a supplier regarding a partner's retirement?

Directly informing the supplier Signup and view all the answers

How are profits shared among partners in the absence of a specific agreement?

Equally among all partners Signup and view all the answers

What is one of the default provisions of the Partnership Act 1890 that partners can override?

Partners cannot bring in new partners without consensus Signup and view all the answers

How do partners pay income tax on the partnership profits?

Evenly regardless of contribution Signup and view all the answers

What happens if actual notice is not given to a supplier regarding a retired partner?

The supplier can assume the partnership is unchanged Signup and view all the answers

Which of the following statements about partners' tax obligations is true?

They pay taxes based on individual incomes Signup and view all the answers

What occurs if a partner knowingly continues to represent themselves as a partner after retirement?

They retain liability for future debts Signup and view all the answers

Study Notes

Company as a Business Medium

Companies are separate legal entities meaning a shareholder is not liable for company debts, unless they are unpaid for their shares.
Directors are not personally liable for company debts unless they have traded wrongfully.
Directors may be personally liable for breaches of their director's duties, which can result in a court ordering a director to contribute to the company's assets.
The memorandum of association must be submitted when registering a company.
Companies may choose to adopt the model rules, otherwise articles of association must be submitted with the application for registering a company.
Company assets are owned by the company itself.

Company Decision Making

A general company meeting can be held no sooner than 22 days after directors email notice to all shareholders.
A short notice meeting can be held on shorter notice if a majority in number of members, holding at least 90% of the shares, consent.

Substantial Property Transactions (SPT)

An SPT involves a director, or someone connected to a director, buying or selling a property of substantial value (greater than £100,000 or greater than £5,000 and greater than 10% of company's net asset value) to or from the company in their personal capacity.
A company can change its registered name through a special resolution or other methods outlined in its articles of association.
A company can change its articles via a special resolution.

Conduct of Company Employee

Conduct of a company employee may be ultra vires, but this conduct will still bind the company if the other party acted in good faith.

Appointing a Director

A new director can be appointed by an ordinary resolution of the shareholders or by a board resolution.
When a director is appointed, the relevant form AP01 must be sent to the Registrar of Companies within 14 days of the appointment

Director's Personal Interests

A director with a personal interest in a transaction cannot be part of the quorum or vote on the transaction, even after declaring their interest.
This rule can be disapplied by amending the Model Articles.

Partnerships

If there is no partnership agreement, profits are shared equally among partners.
Partners can agree to override the default provisions under the Partnership Act 1890.
Partners pay income tax evenly on their total partnership income profits even if their share of capital and/or income is unequal.
A partner will not generally be liable for debts incurred after their retirement unless they fail to give appropriate notice or knowingly hold themselves out as a partner after retirement.
Partners are generally liable for debts and liabilities incurred after their retirement unless they have given appropriate notice as per the Partnership Act 1890.
A partner who fails to give appropriate notice will remain liable even after their retirement.
For a partnership to be bound by a transaction carried out by a partner, an objective test and subjective test must be met.
The partner will still be liable for the debt if the objective and subjective tests are not met.

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Description

This quiz covers essential concepts of company law, focusing on the role of companies as separate legal entities and the implications for shareholders and directors. Understand the registration process, decision-making in meetings, and the liabilities incurred by directors. Test your knowledge on the key principles governing company operations.