Company Termination and Restructuring Options

Company Termination and Restructuring Options

• A Company Voluntary Arrangement (CVA) is a mechanism to help a struggling company manage its financial problems.
• A CVA involves a compromise between the company and its creditors, supervised by an insolvency practitioner.
• A CVA is approved if the majority of creditors and shareholders vote in favour, binding unsecured creditors.
• Secured and preferential creditors maintain their rights unless they consent.
• Administration aims to rescue a company by placing it under the control of an administrator.
• The administrator's role includes reorganising the company, negotiating with creditors, selling the business or assets, and repaying secured or preferential creditors.
• Administration provides statutory protection against creditor actions.
• Fixed asset receivership involves a receiver, appointed by a creditor holding a charge over a debtor's assets, taking custody of these assets, managing them, and collecting income.

Director's Powers and Decision-Making

• Directors have the general power to exercise all of the company's powers unless the articles of association restrict them.
• The board can also delegate powers and call meetings as needed.
• Directors and shareholders have distinct roles in decision-making.
• The type of decision determines the necessary approval process, which can involve board meetings, general meetings, or written resolutions.
• The articles of association or CA 2006 outlines which decisions require board approval.

Convening a Board Meeting

• The articles of association determine who can convene a board meeting.
• Any director can call a meeting, and reasonable notice, as defined by the articles, must be given.
• In the absence of specific notice requirements, a reasonable notice period should be observed.

Quorum

• A quorum is the minimum number of directors required to hold a valid board meeting.
• The articles of association specify the quorum, and the company secretary may attend but does not count toward it.
• In cases of disputes over quorum, the chairperson (if appointed) may decide.

Company Formation

• Incorporation by registration is the most common method, with nearly all new UK companies using this approach.
• It involves subscribing to a memorandum of association and complying with the Companies Act 2006's registration requirements.
• The application for registration is typically submitted using Form IN01, which gathers basic company information.
• Key details include whether the company is public or private, the liability of its members (limited or unlimited), and share capital particulars.

The Articles of Association

• The Articles of Association represent a fundamental component of a company's legal framework, delineating the internal rules and procedures governing its operations.
• Every registered company is required to possess a set of Articles of Association, which function as the company's constitution.
• The Articles of Association are essential to a company's governance structure.
• Non-membership provisions in a company's articles refer to terms and agreements established before the company's incorporation, often involving specific individuals and parties forming the company.
• These provisions typically reflect the expectations that these pre-incorporation agreements will be adopted by the company upon its incorporation.