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Questions and Answers
What is the maximum number of members allowed in a private company?
What is the maximum number of members allowed in a private company?
- 20 members
- 50 members (correct)
- 100 members
- 30 members
Which of the following must a public company do to convert to a private company?
Which of the following must a public company do to convert to a private company?
- Alter its constitution for AGM requirements
- Issue new share certificates to all members
- Submit a new company secretarial appointment
- Lodge a copy of a special resolution (correct)
How much notice is required to pass a special resolution in a private company?
How much notice is required to pass a special resolution in a private company?
- 21 days
- 7 days
- 14 days (correct)
- 30 days
What is one advantage of being classified as a private company regarding AGM?
What is one advantage of being classified as a private company regarding AGM?
Which characterizes the ability of private companies to pass resolutions?
Which characterizes the ability of private companies to pass resolutions?
What is a primary characteristic of a Section 19 company?
What is a primary characteristic of a Section 19 company?
What must a person do to incorporate a company under Section 19?
What must a person do to incorporate a company under Section 19?
What characterizes an unlimited company?
What characterizes an unlimited company?
Which statement is true about private companies?
Which statement is true about private companies?
What happens during the winding up of an unlimited company?
What happens during the winding up of an unlimited company?
What is a key requirement for a limited company to convert to an unlimited company?
What is a key requirement for a limited company to convert to an unlimited company?
Which of the following is NOT true about Section 19 companies?
Which of the following is NOT true about Section 19 companies?
What must a company provide regarding its first financial year when incorporating?
What must a company provide regarding its first financial year when incorporating?
What does the term 'constitution' refer to in relation to a company?
What does the term 'constitution' refer to in relation to a company?
Under which section may a private company limited by shares adopt a model constitution?
Under which section may a private company limited by shares adopt a model constitution?
What legal effect does the constitution have as established in S39(1) CA?
What legal effect does the constitution have as established in S39(1) CA?
What happens to regulations that were in force for a company before January 3, 2016, according to S35(3) CA?
What happens to regulations that were in force for a company before January 3, 2016, according to S35(3) CA?
Which entity must register a company’s constitution under Section 19?
Which entity must register a company’s constitution under Section 19?
What personal right does S39(1) confer upon members regarding the constitution?
What personal right does S39(1) confer upon members regarding the constitution?
What is required for a company to adopt a model constitution according to S37(2) CA?
What is required for a company to adopt a model constitution according to S37(2) CA?
What action can a member take against another member according to the constitution?
What action can a member take against another member according to the constitution?
What is the primary source of a company's contractual status?
What is the primary source of a company's contractual status?
Which of the following statements regarding the constitution of a company is correct?
Which of the following statements regarding the constitution of a company is correct?
What is a significant characteristic of a company's constitution as stated in Section 35 of the Companies Act?
What is a significant characteristic of a company's constitution as stated in Section 35 of the Companies Act?
Under which condition might a non-member have the standing to sue related to a company’s constitution?
Under which condition might a non-member have the standing to sue related to a company’s constitution?
Which of the following can be considered a 'public character' in the context of a company's constitution?
Which of the following can be considered a 'public character' in the context of a company's constitution?
What does the 'qua-member rule' imply for rights conferred by a company's constitution?
What does the 'qua-member rule' imply for rights conferred by a company's constitution?
What impact does misrepresentation have on a company's constitution according to the Companies Act?
What impact does misrepresentation have on a company's constitution according to the Companies Act?
What is the effect of registering a company's constitution with the Registrar?
What is the effect of registering a company's constitution with the Registrar?
What condition causes a corporation to cease qualifying as a small company?
What condition causes a corporation to cease qualifying as a small company?
Which type of company is defined as having shares or securities listed on a recognized stock exchange?
Which type of company is defined as having shares or securities listed on a recognized stock exchange?
What must directors of a parent company do at the end of its financial year?
What must directors of a parent company do at the end of its financial year?
For which of the following companies may an auditor resign by simply giving notice?
For which of the following companies may an auditor resign by simply giving notice?
What relationship does the Companies Act deem between a holding company and its subsidiaries?
What relationship does the Companies Act deem between a holding company and its subsidiaries?
If a corporate group undergoes incorporation, when does it initially qualify as a small company?
If a corporate group undergoes incorporation, when does it initially qualify as a small company?
What is one reason why a non-public interest company can be classified differently from a public interest company?
What is one reason why a non-public interest company can be classified differently from a public interest company?
What is a characteristic of a listed company?
What is a characteristic of a listed company?
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Study Notes
Unlimited Companies
- An unlimited company places no limits on the liability of its members.
- Members are liable to contribute to the company's assets upon winding up.
- Every present and past member is at risk.
- This type of company is rare.
Private Companies
- Restricted right to transfer shares - members have pre-emptive rights.
- Transfers require board approval.
- Maximum of 50 members.
- Must include the word "private" in its name.
- Needs 14 days' written notice for special resolutions.
- May dispense with AGM requirements.
- Can pass resolutions via written means.
Exempt Private Companies
- Must cease qualifying if it fails to meet criteria for two consecutive financial years.
- New groups within their first or second year of incorporation qualify as small companies if they meet the applicable criteria.
Listed and Public Interest Companies
- Listed companies have offered shares or security interests to the public, which are listed on a recognized stock exchange.
- They must be on the official list of the exchange to be considered listed.
- Non-public interest companies may have their auditors resign by giving notice.
- Public-interest companies require auditors to resign before their term expires.
Constitution
- Defined as the company's constitution registered with the Registrar, including amendments.
- For companies incorporated before 3 January 2016, constitution includes the memorandum and articles of association.
- Existing regulations before 3 January 2016 are deemed to be part of the company's constitution until amended.
- The constitution is a contract between the company and its members, and between the members themselves.
- The constitution is binding only on its members.
Member and Outsider Rights
- Companies can choose to adopt all or part of the prescribed model constitution.
- The constitution is binding on the company and its parties but not outsiders.
Conversion between Company Types
- Unlimited companies can convert to limited companies.
- Limited companies can convert to unlimited companies.
- Public companies with share capital can convert to private companies.
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