THE UNIVERSITY OF LAW
BUSINESS LAW AND
PRACTICE
1. COMPANY
,REQUIREMENTS & FEATURES OF A
COMPANY
1
, Company’s acts are its own, even if the Director and member are the same
person (Salomon v Salomon)
SEPARATE Can be subject to criminal proceedings
LEGAL Has rights under the ECHR
PERSONALITY A claim against a subsidiary cannot be brought against the parent
Owns own property, can take out a mortgage/foating charge
Transparency (s1080) and maintenance of capital (s830)
Liability of members are limited to the price of their shares, which they must
LIMITED pay in a winding up (s74(2)(d) IA 1986)
LIABILITY Partly paid shares can only be issued on 1st incorporation (MA21)
PERSONAL Although limited liability may protect a member, if the member voluntarily entered
GUARANTEE into a separate contract guaranteeing that they will be liable, the member is
personally obliged to do what they have agreed (and could be liable for the full
debt)
Mandatory internal rules which govern how a company is run (s18)
They are a contract between the company and its members (s33)
ARTICLES OF They are always available for inspection at CH
ASSOCIATION Must be a single document with numbered paragraphs (s18(3))
You may entrench some Articles (s22) upon notifying the Registrar of the
entrenched Articles (s23)
DIRECTORS Every private company must have at least 1 (s154(1))
Every public company must have at least 2 (s154(2))
A company must have a registered ofce (s86)
REGISTERED It does not have to be the company’s main place of business
OFFICE It is where important correspondence goes and statutory books are kept and where
notice is served
A company may also choose to have a SAIL (single alternative inspection location)
Documents at the Registered Ofce (s1136)
s162(1): available for member inspection without charge
s162(6): non-compliance means all ofcers in default have
REGISTER OF committed an ofence
DIRECTORS s163(1): sets out information to be kept on the registers
s167: duty to notify Registrar of any change within 14 days
REGISTER OF s165(1): every company must have this
DOCUMENTS AT DIRECTORS’ s165(4): non-compliance is an ofence
THE RESIDENTIAL s167(1)(b): duty to notify Registrar of change within 14 days
REGISTERED ADDRESSES with CH01 or TM01 (resign)
OFFICE REGISTER OF s275: available for member inspection without charge
SECRETARIES
s113(1): must keep this for inspection
s114(1): only become a member when your name is
REGISTER OF entered on it
MEMBERS s113(7): non-compliance is an ofence
Before name entered, seller is the legal owner holding
shares on trust for new owner
Old owner must account to new owner for any dividends and
votes
s355(1)(b)/MA15: minutes of GM’s kept for 10 years at RO
MINUTES s358(1): in hard copy or electronically (s1135(1))
s358(3): inspected by the members free of charge
Company is comprised of documents required by s17, s19 and s32, including:
Certificate of incorporation
COMPANY Current statement of capital
CONSTITUTION Copies of resolutions afecting the articles
Agreements involving shareholder afecting the articles
Articles of Association
2
,CONDUCT
MODEL ANSWER
You should not give [NAME] any advice unless you have the necessary skill and
expertise to be competent to act in the best interests and provide the good standard of
service required by Solicitors’ Conduct Principles 4 and 5 and only where competent as
required by Outcome 1.4
As a trainee, you are highly unlikely to have the necessary competence and skill to give
[NAME] advice on [SITUATION]
You should therefore refer the request to a solicitor in the department
Assuming that person has the necessary competence and skill, they could only advise
[NAME] if doing so would not breach s19 Financial Services Markets Act 2000
s19 prohibits the firm from carrying out ‘regulated activity’, unless authorised to do so
by the FSA (facts state that firm is not)
Carrying out a regulated activity without authorisation, and breaching s19, is a criminal
ofence (s23 FSMA 2000) (and the contracts entered into could be rendered
unenforceable)
Regulated Activity [- refer to workshop 7 again)
To constitute a Regulated Activity, the advice-giving would have to:
1. Be carried on by way of business (clearly, as firm is a private/public practice,
providing a professional service to a client)
2. Involve a specified investment (on these facts, yes, as company shares are
specified investment/arranging life insurance (see conduct notes))
3. Constitute a specified investment activity (giving advice on the merits of selling
a particular specified investment (shares in [COMPANY]/life insurance) is such an
activity)
4. Not be excluded from counting as regulated activity (excluded if it occurs in
connection with the client’s pre-existing instructions to act on the sale of at least
50% of voting shares in [COMPANY] (the ‘takeover’ exclusion))
See conduct notes for other exclusions
Thus, this is/is not a regulated activity
On the facts, a solicitor with the necessary skill and expertise to be competent
could/could not advise [NAME] without breaching s19 FSMA 2000
Acting for colleagues or other people
- You cant act where there is a confict or significant risk of confict between two or
more current client unless the matter falls within the scope of an exception
( Chapter 3 Code of conduct). SEE if there is risk ( apply and ) if there is say you will
need to satisfy one of the exceptions set out in outcomes 3.6/3.7 of the code.
- First need to satisfy that if your acting for all of them, you are acting in the best
interests of each client ( Principle 4)
- Secondly , if you rely on outcome 3.6 of the code, you can only act if you have
excplained the relevant issues and risks to the clients and you have reasonable
belief that they understand those issues and risks and all the clients have given
written informed consent AND you are satisfied the benefits to the clients of acting
outweigh the risks.
3
, PROCEDURE PLANS
ADDRESS / SECRETARY / ACCOUNTING REFERENCE /
AUDITORS
Directors can change the registered address under their general powers (MA3/TA70) by giving
notice to the registrar (s87(1)) using AD01 form . The change takes efect on notice, but the old
address remains valid for service for 14 days (s87(2))
BM1
Resolve to approve change of address from X to Y; MA3/TA70 general management
CHANGE OF powers
REGISTERE Simply majority required; MA7/TA88
D OFFICE
FILING
Internal; minutes of BM1 kept for 10 years from date of meeting, kept at Registered
Ofce; s248; MA15/TA100(b). Also company will have to change website, documents
and stationary so everybody is aware of the new registered ofce. Documents will have
to be changed within 14 days.
External; send notice to registrar/Companies House, Form AD01; s87(1). Change takes
efect upon notice being registered by registrar, but until the end of the period of 14
days beginning with the date on which it is registered, a person may validly serve any
document on the company at the address previously registered; s87(2)
FAILURE
1. Can be fined for not keeping BM minutes; s248(4)
2. Can be fined for not maintaining proper records; s1134
BM1
Resolve to appoint Secretary; TA99, MA3/TA70 general management powers
Requires a simple majority; MA7/TA88
FILING
Internal
APPOINTIN
GA 1) Minutes of BM1 must be kept for 10 years from the date of the meeting, kept at the
SECRETARY Registered Ofce; s248; MA15/TA100(a)
2) amend register of Secretaries; s275
External; send Form AP03 to registrar/Companies House within 14 days of
appointment ; s276(1)(a)
FAILURE
1) Can be fined for not keeping BM minutes; s248(4)
2) Company/Director can be fined for not updating/making available for inspection the
register of Secretaries; s275(6)&(7)
3) Director can be fined for not notifying Companies House of changes to register;
s276(3)&(4)
Directors can change the accounting reference date under their general powers (MA3/TA70) by
giving notice to the registrar (s392(1)) using AA01 form.
BM1
Resolve to change accounting period from X to Y; MA3/TA70 general management
CHANGE OF powers
ACCOUNTIN Simply majority required; MA7/TA88
G
REFERENCE FILING
4
, DATE Internal; minutes of BM1 must be kept for 10 years from the date of meeting, kept at
Registered Ofce; s248; MA15/TA100(b)
External; send notice to registrar/Companies House, Form AA01, stating whether
current/previous period will be shortened/extended; s392(1) & (2)
FAILURE
1. Can be fined for not keeping BM minutes; s248(4)
2. Period may not be extended so as to exceed 18 months and notice stating this will be
inefective; s392(5) ( cant be more than 18 months ) . Also cannot be changed too
often, cant do it more than once in a 5 year period.
3. It take efect once registrar has received the AA01 form.
Must be qualified and independent; s1212 – s1215
After first appointment, shareholders can appoint by OR s485(4)
APPOINTIN BM1
G AN Resolve to appoint Auditor; MA3/TA70 general management powers
AUDITOR Simple Majority required; MA7/TA88
FILING
Internal; minutes of BM must be kept at the Registered Ofce for 10 years from the
date of the meeting; s248; MA15/TA100(a)
FAILURE
Can be fined for not keeping BM minutes; s248(4)
BM1
Resolve to accept resignation; MA3/TA70 general management powers
Simple majority required; MA7/TA88
FILING
REISGNATI Internal
ON OF 1) Minutes of BM1 must be kept at the Registered Ofce for 10 years from the date of the
AUDITOR meeting; s248; MA15/TA100(b)
2) Statement by Auditors that they did not resign for anything that will afect
shareholders and creditors; s519
External
Letter of resignation sent to Registrar/Companies House within 14 days; s517
FAILURE
Can be fined for not keeping BM minutes; s248(4)
CHANGING THE COMPANY
NAME
the trading name can be done by board resolution alone
AUTHORITY s77: a company can change its name by SR (or set out in Articles)
Must check that the proposed name is available at CH:
Full Trade Mark search
A search on www.companieshouse.gov.uk
AVAILABILITY A search on Google/Yellow Pages
Cannot have the same as one already registered (s66(1))
The name cannot be confused with another business
Must end in plc or ltd (s58 and s59)
Name must not be restricted (s53, s54 and s55)
Change by member SR
Under s78(1)
Give notice to Registrar on Form NM01
ADMINISTRATI Send a copy of the SR to CH
ON
Change under Articles
5
, Under s79(1)
Give notice to Registrar on Form NM01
Send a statement to CH saying the name was changed under the provision of the
Articles
BM1
Approve the change of the name
Call a GM/WR
RESOLUTIONS
GM
SR to change the name (s77)
The Registrar will enter the new name on the register (s80(2))
It is efective when the Registrar issues a new certificate on incorporation with the
EFFECTIVE new name on it (s81(1))
The company must display the correct name from this date; rules in s82 – s85
CHANGING THE COMPANY ARTICLES
It may be done by SR of the members (s21(1))
So, not less than 75% of the eligible members (s283(1))
The change must:
AUTHORITY Not confict with mandatory provisions in the CA
Be made in good faith and in the best interests
Not attempt to remove entrenched Articles
BM1
Approve the draft Articles
Call a GM/WR
RESOLUTIONS
GM
Special Resolution to adopt the new articles (s21)
Send to Companies House
Copy of amended Articles not less than 15 days after amendment takes
ADMINISTRATI efect (s26(1))
ON Copy of the SR within 15 days of it being passed (s30(1))
If entrenching an Article (s22), a copy of this and Form CC01
Internal filing: minutes of the board meeting and minutes of GM if there was one
or copy of the written resolution
EFFECTIVE Usually on the day the amendment is passed by the members by SR, but
there may be a special provision as to when it takes efect
PROCEDURE PLANS
AMENDING ARTICLES AND CHANGING COMPANY
NAME
A company may amend its articles by SR (s21). These must be filed with the registrar (s26)
along with a copy of the SR (s29-s30)
BM1
Resolve to;
1) Approve the wording of the changing of the Articles; MA3/TA70 general
management powers
2) Call GM; s302 or circulate WR; s291 to change Articles
Simple majority required; MA7/TA88
If no short notice, internal filing of BM1 minutes; s248
AMENDING GM/WR
ARTICLES SR required to approve amendment to company’s articles to include/exclude; s21(1)
6
, OF 75% required to pass SR; s283(1)
ASSOCIATI
ON
BM2
Resolve to do filing
Make it clear that it is for no other purpose
FILING
Internal
1) Minutes of BM1 & BM2 to be kept for 10 years from the date of meeting, kept at the
Registered Ofce; s248; MA15/TA100(b)
2) Minutes of GM/WR kept for 10 years from date of meeting s355, TA100(b)
External
1) Copy of Amended Articles not less than 15 days after amendment takes place;
s26(1)
2) SR within 15 days of it being passed; s30(1)
3) Form CC01 to registrar/Companies House within 14 days if Articles are entrenched;
s23
FAILURE
Can be fined for not keeping BM minutes; s248(4)
Can be fined for not keeping GM minutes; s355(4)
Person guilty liable to a fine; s26(4) and must send relevant documentation. Failure to
do so may result in criminal proceedings; s27
A company may change its name by SR (s77). It must give notice to the registrar
(s78(1) using NM01 and submit a copy of the SR (s29 – s30). The change of name is
not efective until the registrar issues a new certificate of incorporation (s81)
Check restrictions as to the name; s54 – s67.
Conduct Google, yellow pages and full Trade Mark search to check name is suitable
BM1
Resolve to;
CHANGE OF i) Approve the change of name; MA3/TA70 general management powers
COMPANY ii) Call GM; s302 or circulate WR; s291 to change the name;
NAME Simple majority is required; MA7/TA88
If no short notice, internal filing of BM1 minutes; s248
GM/WR
SR required to change of company name from X to Y; s77(1)
75% required to pass SR; s283(1)
BM2
Resolve to do filing
Make it clear that it is for no other purpose
FILING
Internal
1) Minutes of BM1 & BM2 to be kept for 10 years from the date of meeting, kept at the
Registered Ofce; s248; MA15/TA100(b)
2) Minutes of GM/WR kept for 10 years from the date of the meeting; s355; TA100(b)
External
1) Form NM01 (+ fee £10) and fee to Registrar/Companies House; s79(1)
2) Forward a copy of the SR to Registrar; s78
One the Registrar is satisfied that the new name is compliant, it will enter the new
name on the register; s80(2) and issue new certificate on incorporation; s80(3)
The new company name is efective from the date on the new certificate of
incorporation; s81(1)
FAILURE
Can be fined for not keeping BM minutes; s248(4)
Can be fined for not keeping GM minutes; s355(4)
7
, MODEL ANSWER
CHANGING COMPANY NAME AND ARTICLES
Do not include statute if written assessment
As requested, here is the list of board resolutions required and explanation of the
written resolution procedure to be followed in order to [CHANGE COMPANY NAME AND
ARTICLES]
Board Meeting Resolutions
On [ONE WEEK AFTER DATE] the Board will resolve to:
Approve the name change and ask the members to change the name of the Company to
[NAME]
Approve the draft articles; and
Propose the following written resolutions (s288(3)):
1. Change name, requiring Special Resolution (“SR”) (s77)
2. Adopt new articles, requiring SR (s21)
Written Resolution Procedure
The written resolutions (“WRs”) must be provided to all eligible members for signature
(s291(2))
After proposing the WRs the Board will ask the secretary or us to give all the eligible
members ([NAME OF SHAREHOLDERS]):
The WRs (s291(2))
A statement explaining how to signify agreement and the 28 day deadline for
returning the WRs (namely [DATE], if the WRs are circulated on the date of the board
meeting) (s291(4) and s297 as there is no special article amending the standard 28 day
deadline)
A copy of the draft articles
The auditor is also entitled to a copy of the WR (s502)
Each eligible member has one vote for each share they own (s284(1)(a))
To pass the SRs requires that members holding at least 75% of all the ordinary shares vote
in favour (s283(2)). All [NUMBER OF SH] members must agree, as they each hold more than
[25%] of the shares.
The resolutions are passed when the company has received the necessary number of votes
(s296(4)), as long as this is within the 28 day deadline. These resolutions will all be passed
as soon as [SHAREHOLDER NAMES] have signed and returned the WRs to the company.
Therefore, [DISAGREEING SH] must agree.
Please let me know if you could like me to draft the minutes and resolutions.
Trainee
PROCEDURE PLAN
APPOINTMENT OF DIRECTORS BY BOARD/MEMBERS
Directors can appoint a new director (MA17(1)(b)/TA79). The company must update its register of directors
(s162) and register of directors’ residential addresses (s165), and must notify the registrar within 14 days
(s167(1)(a) using AP01
Must obtain consent of person becoming Director
8
, Must be reappointed by OR of shareholders at next AGM
BM1
Resolve to appoint director
Simple majority; MA7/TA88
APPOINTM FILING
ENT OF Internal
DIRECTOR 1) Update Register of Directors; s162(1)
BY BOARD; 2) Update Register of Directors Residential Addresses; s165; particulars of directors to be
IF registered; s163
DIRECTORS 3) Minutes of BM to be kept at the Registered Ofce for 10 years from the date of the
ARE meeting; s248; MA15/TA100(a)
MEMBERS 4) Update stationary; s82
External
i) Send Form AP01 to Companies House/Registrar within 14 days of that person
becoming a director; s167(2)(b)
ii) Send statement signed by Director indicating their consent to act as a Director;
s167(2)(b)
iii) Send Form CH01 to Companies House/Registrar within 14 days; s167(1)(b); change
of individual director’s details
iv) If corporate director then need AP02 form/
FAILURE
Can be fined for not keeping BM minutes; s248(4)
Company/Director can be fined for not updating Register of Directors; s162(6)&(7) or
Register of Directors’ Addresses; s165(4)&(5)
Directors can be fined for not notifying Companies House of changes to register;
s167(4)&(5)
Must obtain consent of person becoming Director
BM1
Resolve to call GM; s302 or circulate a WR; s291 to appoint Director
If no short notice, internal filing of BM1 minutes; s248
GM/WR
OR required to appoint Director; +50% required; s282; MA17/TA78 – 50 percent of
shareholders required to appoint director
APPOINTM
ENT OF
DIRECTOR BM2
BY Resolve to appoint [NAME] to board
MEMBERS;
IF
DIRECTORS FILING
DIFFERENT Internal
TO 1) Minutes of BM1 & BM2 must be kept at the Registered Ofce for 10 years from date of
MEMBERS meeting; s248; MA15/TA100(b)
2) Minutes of the GM/WR must be kept for 10 years from the date of the meeting; s355
3) Update Register of Directors; s162(1)
4) Minutes of BM to be kept at the Registered Ofce for 10 years from the date of the
meeting; s248; MA15/TA100(a)
5) Update stationary; s82
External
i) Send Form AP01 to Companies House/Registrar within 14 days of that person
becoming a director; s167(2)(b)
ii) Send statement signed by Director indicating their consent to act as a Director;
s167(2)(b)
iii) Send Form CH01 to Companies House/Registrar within 14 days; s167(1)(b); change
of individual director’s details
9
