COMPANIES vol 9 | ��Ӱ��

COMPANIES vol 9(1) commentary, articles

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About this title—authors, overview

Commentary

1.1 The genesis of the Companies Act 2006

1.2 The objectives of the Companies Act 2006

2 Classification of companies

3 General

4.1 Introduction

4.2 Advantages of limited liability

4.3 Disadvantages of limited liability

5.1 General

5.2 Members’ liability under a company limited by guarantee

6.1 General

6.2 Effect of unlimited liability

6.3 Exemption from the obligation to file accounts

6.4 The uses of an unlimited liability company

7.1 Public companies

7.2 Private companies

7.3 The public company as a vehicle for public investment

8.1 Minimum share capital on commencement of trading

8.2 Consideration for allotment of shares

8.3 Acquisition of non-cash asset in initial period

8.4 Forfeiture, surrender and buy-back of shares

8.5 Distribution of profits

8.6 Financial assistance for acquisition by public company of its own shares

8.7 Redemption or purchase by a private company of its own shares out of capital

8.8 Duty of directors on serious loss of capital

9.1 Directors

9.2 Company secretary

9.3 Shareholders

9.4 Financial reporting obligations

10 The position of the minority shareholder in a private company

11 Background

12 Entries in the company’s register of members

13 Recording decisions of a sole member

14 Introduction to community interest companies

15 Application of the companies legislation

16 The community interest test

17 The ‘asset lock’

18 Reporting obligations

19 The role of the Regulator

20.1 New companies

20.2 Existing companies

21.1 Definition of an overseas company

21.2 Duty to register particulars

21.3 Registered name of overseas company

21.4 Accounts and reports

21.5 Company charges

21.6 Winding up and other insolvency proceedings

21.7 Trading disclosures

21.8 Offences

22.1 Introduction

22.2 Registration

22.3 Shares

22.4 Shareholder’s liability

22.5 Meetings of the company

22.6 Quorum required for meetings

22.7 Directors

22.8 Borrowing

23.1 Obtaining a charter

23.2 Powers of a chartered company

24.1 Introduction

24.2 Formation

24.3 Capital requirements

24.4 Management

24.5 Effect of registration

25.1 Nature of EEIGs

25.2 Characteristics of an EEIG

25.3 Formation, registration and management

26 Limited Liability Partnerships

27 Introduction

28 Prohibition against registration

29 Overview of the documents that must be provided

30 The memorandum of association

31.1 Delivery of the application

31.2 The company name

32.1 Overview

32.2 Statement of proposed officers

32.3 Statement of capital and initial shareholdings

32.4 Statement of initial significant control

32.5 Statement of the type of company and its intended principal business activities

32.6 The articles of association—accommodating provisions previously contained in the memorandum

32.7 The articles of association—the three main approaches to drafting articles

33 Statement of compliance

34 Fee

35 Registration

36 Public companies—requirement for a trading certificate

37 Introduction

38.1 Re-registration as a public limited company

38.2 Re-registration as an unlimited company

39.1 Re-registration as a private limited company by share or guarantee

39.2 Re-registration as an unlimited private company

40 Re-registration by an unlimited company as a limited company

41.1 The need for publicity

41.2 Means of providing information

42 Application for registration

43 The confirmation statement and the annual accounts and reports

44.1 General information and documents

44.2 Change to the company’s articles

44.3 Changes to a company’s share capital

44.4 Filing of resolutions and agreements affecting a company’s constitution

45 Introduction

46 Register of members and index of members

47 Private company election for register of members

48.1 Scope of the PSC regime

48.10 Duty to keep a PSC register

48.11 Required particulars

48.12 Rectification of the register

48.13 Inspection of the PSC register

48.14 Alternative method of record-keeping

48.15 Protection from disclosure

48.2 People with significant control

48.3 Significant influence or control

48.4 Additional rules of interpretation

48.5 Registrable people with significant control

48.6 Duty on companies to investigate and obtain information

48.7 Duty on companies to keep information up to date

48.8 Restrictions

48.9 Duty on others to supply information

49 Overseas branch registers

50 Register of directors and register of directors’ residential addresses

51 Register of directors and register of directors’ residential addresses—private companies’ election

52 Register of secretaries

53 Register of secretaries—private companies’ election

54 Copies of instruments creating charges

55 Register of debenture holders

56 Inspection of directors’ service contracts

57 Copies of directors’ indemnities

58 Records of company resolutions and prescribed details of sole member’s decisions

59 Contracts relating to the purchase of the company’s own shares

60 Documents relating to the company’s redemption or purchase of its own shares out of capital

61 Introduction

62.1 Company’s power to serve a notice

62.2 The register and associated index

63.1 Members’ power to require disclosure notice

63.2 Preparation and inspection of disclosure reports

64 Introduction

65 Publication of company name

66 Further particulars to appear in business letters, order forms and websites

67 Disclosure of directors’ names

68 Disclosures relating to registered office and inspection place

69 Civil and criminal penalties for failure to comply with disclosure requirements

70 Duty to deliver confirmation statements

71 Duties to notify a relevant event

72 Other duties

73 Failure to deliver a confirmation statement

74 Introduction

75.1 The small companies regime

75.2 Micro-entities

76.1 Individual accounts

76.2 Group accounts

77 Information to be given in notes to the accounts

78 Approval and signing of accounts

79.1 Strategic report

79.2 Directors’ report

80 Auditor’s report

81.1 Introduction

81.2 Companies to which the duty applies

81.3 Contracts to which the information relates

81.4 Duty to publish information on payment practices, policies and performance

82 Publication of accounts and reports

83 Filing of accounts and reports

84 Revision of defective accounts and reports

85 Role of the articles

86 Invalid articles

87 Construction of the articles

88 Enforcement limited to membership rights

89 The difference between membership rights and outsider rights

90 Action to restrain unconstitutional behaviour

91 Actions between members

92 Use of model articles

93 Using special articles

94 Liability of members

95 Directors’ powers and responsibilities

96.1 Introduction

96.2 Unanimous decisions

96.3 Calling a board meeting

96.4 Business to be transacted at a board meeting

96.5 Participation in a board meeting

96.6 Appointment of a chairman

96.7 Conflict of interest

96.8 Records of decisions

96.9 Directors’ discretion to make further rules

97.1 Methods of appointment

97.2 Termination of director’s appointment

97.3 Directors’ remuneration and expenses

97.4 Alternate directors

98 General

99 Redeemable shares

100 Share certificates

101 Transfer procedure

102 Directors’ power to refuse registration

103.1 Introduction

103.2 Permitted transfers

103.3 Pre-emption provisions

104 Transmission of shares

105.1 Consolidation of shares

105.2 Partly paid shares

106 Introduction

107 Declaration of dividends

108 Payment of dividends

109 Interim dividends

110 Power to capitalise profits

111 Quorum

112 Chairman of a general meeting

113 Attendance and speaking at general meetings

114 Adjournment

115 General

116 Poll votes

117.1 Introduction

117.2 Proxy notices

117.3 Time for notifying appointment of a proxy

117.4 Termination of a proxy’s authority

118 Amendments to resolutions

119 Means of communication to be used

120 Company seals

121 No right to inspect accounts and other records

122 Provision for employees on cessation of business

123 Indemnity

124 Insurance

125 The new regime

126.1 The ‘ultra vires’ rule

126.2 Attempts by the courts to limit company objects clauses

126.3 Attempts to circumvent the main objects rule

126.4 Recent developments

127 Effect on existing companies

128 Shareholder’s right to restrain ultra vires actions

129 Companies Act 2006 Section 21

130 Position of a minority shareholder

131 Agreement to restrict the company’s power to amend its articles

132.1 The effect of Section 28 of the Companies Act 2006

132.2 Company name

132.3 Company objects

132.4 Authorised capital

132.5 Entrenchment provisions

132.6 Conflicts between old and new articles

133 Articles that conflict with mandatory provisions of the Companies Act 2006

134.1 Introduction

134.2 Restrictions on alterations to a company’s share capital

134.3 Existing provisions authorising the directors to allot shares and other securities

134.4 Provisions expressly imposing, or assuming, the holding of an annual general meeting

134.5 Provisions in a private company’s articles requiring appointment of a company secretary or assuming that it has one

134.6 Provisions relating to directors’ conflicts of interest

134.7 Provisions relating to directors’ interests in company transactions

134.8 Summary

135 Table A requiring greater formality than the model articles under the 2006 Act

136 Buying a ready-made company

137 Advantages and disadvantages of using a shelf company

138 Constitutional documents

139 Transfer of executive control

140 Transfer of subscribers’ shares

141 Other forms that may be provided

142 The need for a board meeting

143 Board appointments and contracts

144 Financial decisions

145 Other decisions

146 Changes to the company’s constitution

147 Shareholder authorisations

148 Use of written resolutions

149 Convening a general meeting

150.1 Formation agreements

150.2 Formation agreements contrasted with shareholders’ agreements

150.3 Cases where formation agreements may desirable

151 Problem areas

152.1 Procuring shareholders’ resolutions

152.2 Procuring decisions by the directors

153.1 Effect of pre-incorporation contracts

153.2 Promoter’s personal liability under Companies Act 2006 s 51

153.3 Conclusion

154 The statutory contract under the Companies Act 2006

155 Changing the statutory contract

156.1 The parties’ expectations

156.2 Decision making

157.1 Invalid amendments

157.2 Other limitations on amending the articles

158.1 Russell v Northern Bank

158.2 Impact on the drafting of a shareholders’ agreement

159 Who should be the parties to the agreement?

160 The need for consistency between the articles and the shareholders’ agreement

161 Ensuring consistency between the shareholders’ agreement and any subsidiary agreements

162 Summary of preliminary drafting points

163 Customising a shelf company

164 Initial capital

165 Further finance from the company’s shareholders

166 Further finance from outside the joint venture

167.1 The desirability of a distribution policy

167.2 Default provisions in the shareholders’ agreement

168 The need for restrictions on board and shareholders’ decisions

169.1 Restrictions which should be accepted by the shareholders alone

169.2 General running of the business

169.3 Financial policy

169.4 Transactions involving directors, employees and consultants

169.5 Litigation

170 Ensuring that the shareholders have adequate information to make decisions

171 The need for deadlock provisions

172 The aim of deadlock provisions

173.1 When will the deadlock provisions apply?

173.2 Third party references

173.3 Escalation clauses

173.4 Russian roulette

173.5 Winding up of the company

174 Damages, specific performance and injunctions

175 Termination of the shareholders’ agreement for breach and on other grounds

176 Dispute resolution

177 The need for restrictions on transfer

178.1 The transfer notice

178.2 Valuation of the shares

178.3 Notification and offers

178.4 Completion

179 Location of pre-emption procedures

180.1 Possible clauses in a shareholders’ agreement

180.2 General principles relating to restrictive covenants

180.3 The court’s approach to restraint of trade clauses

180.4 Application to shareholders’ agreements—legitimate interest

180.5 Application to shareholders’ agreements—reasonableness

180.6 Competition Act 1998

181 Termination of the business

182 Winding up of the company

183 The main remedies for breach of a shareholders’ agreement

184.1 Damages

184.2 Equitable remedies

185 Leaving the company

186.1 The provisions of the Companies Act 2006 Section 994

186.2 The meaning of unfair prejudice

186.3 Unfair prejudice in the context of a shareholders’ agreement

186.4 Remedies for unfair prejudice

186.5 Valuation of the company’s business

186.6 Discounts and premiums

186.7 Problems in petitioning for breach of a shareholders’ agreement

187 Petitioning for the winding up of the company

188 The significance of the tax treatment of a business

189 Rates of tax

190 Capital allowances

191 Loss relief

192.1 Introduction

192.2 Dividends

192.3 Salaries

192.4 Loan capital

192.5 Conclusion

193 Time for payment

194 Roll-over relief

195 Double taxation and property held outside the company

196 Outline of the pensions regime

197 The advantages of a company structure

198 Investment in a partnership

199 Investment in a company

200 Introduction

201.1 Sole trader

201.2 Partnership

201.3 Company

201.4 Conclusion

202.1 Entrepreneurs’ relief

202.2 Roll-over relief

202.3 Hold-over relief

202.4 Conclusion

203.1 Potentially exempt transfers

203.2 Business property relief

203.3 Calculation of inheritance tax

203.4 Interrelationship between inheritance tax and capital gains tax hold-over relief

203.5 Conclusion

204 Income tax consequences of the death of a proprietor

205 Capital gains tax

206.1 Deemed transfer of value on death

206.2 Business property relief

206.3 Calculating the inheritance tax on the estate

206.4 Conclusion

207 Introduction

208.1 Implications for the seller

208.2 Implications for the purchaser

209.1 Implications for the seller

209.2 Implications for the purchasing company

210 Inheritance tax

211.1 Stamp duty

211.2 Stamp duty land tax and similar devolved taxes

212.1 Introduction

212.2 Application to the incorporation of a business

213 Rationale behind the regime

214 Overview of the regime

215.1 The control tests

215.2 The winding-up test

215.3 Excluded companies

216 ‘Participator’

217 ‘Loan creditor’

218 ‘Director’

219 ‘Control’

220 ‘Associate’

221 ‘Associated company’

222 Applying the close company definition

223.1 Certain expenses deemed to be distributions

223.2 Excluded expenses

223.3 Taxation of the benefit

224.1 The charge to tax

224.2 Loans and advances excluded from the charge

224.3 Relief in case of repayment or release of the loan

224.4 Tax position of the borrower

224.5 Tax inspector’s power to request information

225 Capital gains of non-resident close companies

226 Transfers at an undervalue

227 Warranties or indemnities on sale

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