BUSINESS LAW IN PRACTICE
COMPANIES: DIFFERENCES OF PRIVATE VS. PUBLIC
PRIVATE COMPANY PUBLIC COMPANY
Name Must end in Limited or Ltd (s.59(1)) Must end in Public Limited Company or
PLC (s.58(1))
Min. shareholders 1 shareholder (s.7(1) and s.8(1)) 1 shareholder (s.7(1) and s.8(1))
Min. directors 1 director (s.154(1)) 2 directors (s.154(2))
Min. secretary No secretary required (s.270(1)) Secretary required (s.271)
Certificates required Certificate of Incorporation issued by Certificate of Incorporation issued by
prior to Companies House (s.15(4)). Companies House (s.15(4)).
commencement of Can commence trading as soon as ALSO – needs a trading certificate
trading incorporated. issued by Companies House showing
that the company’s allotted share
capital is not less than the minimum
(s.761(1)(2)).
Min. share capital Only one share (s.8(1)(b)) Min. of £50,000 (or the euro
equivalent) (s.763(1)(a)).
Can shares been NO (S.755(1)). Permitted by the Companies Act 2006
offered to the public? (FSMA imposes restrictions).
Method of payment No specified method of payment Payment in cash only.
and minimum amount (s.582(1)(2)). Non-cash consideration (e.g. giving
payable for share Shares can be issued without need for Property for shares) must be valued by
capital immediate payment. an independent auditor (s.593(1)).
25% of nominal value must be paid on
allotment plus the whole amount of
any premium paid on the shares
(s.586(1)).
MODEL ARTICLES (MA): The Model Articles are a set of pre-drafted Articles that a company can adopt on
incorporation. They will not usually cover everything that a company will need.
LEGALITIES OF BOARD MEETINGS
Who can call a board meeting? MA 9(1): Any director.
What notice needs to be given? Reasonable notice of the board meeting must be given (CASE: Browne v
La Trinidad).
Quorum (number of directors MA 11(2): May be fixed from time to time but must never be less than
that are required to be present two, and unless otherwise fixed, is two.
at a board meeting):
How are decisions decided? MA 7(1): Board resolutions are passed on by a simple majority (more
than 50% of directors in favour) at a board meeting
Chairman: The chairman will have a casting vote in the event of a deadlock (unless
the articles have been amended).
An abstaining director: Where a director abstains from voting, he/she does not count towards
the number voting on that issue.
E.g. Where there are 5 directors, if one abstains, you would count them
out of 4. To get a majority you would need 3 out of 4 (75% - as 50% is
not enough… needs to be MORE than 50%) voting in favour of the
resolution.
, BUSINESS LAW IN PRACTICE
SHAREHOLDERS AND THEIR DECISIONS
What is a shareholder? A shareholder owns the company (whereas the directors just manage
the company’s day to day business).
Quorum (number of S.318(2) Companies Act: two shareholders
shareholders that are required S.318(1): Unless the company has only one shareholder (*shareholders
to be present at a shareholder are also called members), in which case, one shareholder is sufficient.
meeting):
How are decisions made at a On a show of hands (one vote per shareholder) unless a poll vote is
shareholders’ meeting (*also demanded under MA 42.
called a general meeting)? s.284(2): Where shareholders vote on a show of hands, each
shareholder is entitled to one vote.
S.284(3): When the shareholders vote on a poll, each shareholder has
one vote in respect of each share held by him/her.
Demanding a poll vote: MA 44(1): A poll can be demanded before the meeting, or during the
meeting either before, or immediately after a show of hands vote has
taken place.
MA 44(2): The chairman, the directors, two or more shareholders or any
shareholder with not less than 10% of the voting rights can demand a
poll vote.
COMMON COMPANY DECISIONS
What? Who needs to Statutory authority What type of What meeting
authorise the resolution? needs to be held?
change?
Change of name Shareholders S.77(1)(a) CA Special Resolution Shareholder
OR S.77(1)(b) CA (not less than 75% meeting
By following the voting in favour) (if OR
procedure set out passed by As otherwise
in the Company’s shareholders) provided for in the
Articles (if OR Company’s
provided for) As provided in the Articles.
Company’s Articles
Resignation of Secretary needs to N/A Usual to have a Board meeting
secretary send a resignation board resolution
letter to the Board
Appointment of Directors MA 3 and MA 5 Usual to have a Board meeting
secretary S.270(1) CA board resolution
Appointment of Directors or MA 17(1)(b) Board Resolution Board meeting
directors shareholders MA 17(1)(a) OR OR
Ordinary Shareholder
Resolution (more meeting (as
than 50% of applicable)
shareholders)
Resignation of Director needs to MA 18(f) Usual to have a Board meeting
directors send resignation board resolution to
letter to the Board accept resignations
Appoint new Directors vote for a MA 12(1) Board resolution Board meeting
chairperson chairperson
COMPANIES: DIFFERENCES OF PRIVATE VS. PUBLIC
PRIVATE COMPANY PUBLIC COMPANY
Name Must end in Limited or Ltd (s.59(1)) Must end in Public Limited Company or
PLC (s.58(1))
Min. shareholders 1 shareholder (s.7(1) and s.8(1)) 1 shareholder (s.7(1) and s.8(1))
Min. directors 1 director (s.154(1)) 2 directors (s.154(2))
Min. secretary No secretary required (s.270(1)) Secretary required (s.271)
Certificates required Certificate of Incorporation issued by Certificate of Incorporation issued by
prior to Companies House (s.15(4)). Companies House (s.15(4)).
commencement of Can commence trading as soon as ALSO – needs a trading certificate
trading incorporated. issued by Companies House showing
that the company’s allotted share
capital is not less than the minimum
(s.761(1)(2)).
Min. share capital Only one share (s.8(1)(b)) Min. of £50,000 (or the euro
equivalent) (s.763(1)(a)).
Can shares been NO (S.755(1)). Permitted by the Companies Act 2006
offered to the public? (FSMA imposes restrictions).
Method of payment No specified method of payment Payment in cash only.
and minimum amount (s.582(1)(2)). Non-cash consideration (e.g. giving
payable for share Shares can be issued without need for Property for shares) must be valued by
capital immediate payment. an independent auditor (s.593(1)).
25% of nominal value must be paid on
allotment plus the whole amount of
any premium paid on the shares
(s.586(1)).
MODEL ARTICLES (MA): The Model Articles are a set of pre-drafted Articles that a company can adopt on
incorporation. They will not usually cover everything that a company will need.
LEGALITIES OF BOARD MEETINGS
Who can call a board meeting? MA 9(1): Any director.
What notice needs to be given? Reasonable notice of the board meeting must be given (CASE: Browne v
La Trinidad).
Quorum (number of directors MA 11(2): May be fixed from time to time but must never be less than
that are required to be present two, and unless otherwise fixed, is two.
at a board meeting):
How are decisions decided? MA 7(1): Board resolutions are passed on by a simple majority (more
than 50% of directors in favour) at a board meeting
Chairman: The chairman will have a casting vote in the event of a deadlock (unless
the articles have been amended).
An abstaining director: Where a director abstains from voting, he/she does not count towards
the number voting on that issue.
E.g. Where there are 5 directors, if one abstains, you would count them
out of 4. To get a majority you would need 3 out of 4 (75% - as 50% is
not enough… needs to be MORE than 50%) voting in favour of the
resolution.
, BUSINESS LAW IN PRACTICE
SHAREHOLDERS AND THEIR DECISIONS
What is a shareholder? A shareholder owns the company (whereas the directors just manage
the company’s day to day business).
Quorum (number of S.318(2) Companies Act: two shareholders
shareholders that are required S.318(1): Unless the company has only one shareholder (*shareholders
to be present at a shareholder are also called members), in which case, one shareholder is sufficient.
meeting):
How are decisions made at a On a show of hands (one vote per shareholder) unless a poll vote is
shareholders’ meeting (*also demanded under MA 42.
called a general meeting)? s.284(2): Where shareholders vote on a show of hands, each
shareholder is entitled to one vote.
S.284(3): When the shareholders vote on a poll, each shareholder has
one vote in respect of each share held by him/her.
Demanding a poll vote: MA 44(1): A poll can be demanded before the meeting, or during the
meeting either before, or immediately after a show of hands vote has
taken place.
MA 44(2): The chairman, the directors, two or more shareholders or any
shareholder with not less than 10% of the voting rights can demand a
poll vote.
COMMON COMPANY DECISIONS
What? Who needs to Statutory authority What type of What meeting
authorise the resolution? needs to be held?
change?
Change of name Shareholders S.77(1)(a) CA Special Resolution Shareholder
OR S.77(1)(b) CA (not less than 75% meeting
By following the voting in favour) (if OR
procedure set out passed by As otherwise
in the Company’s shareholders) provided for in the
Articles (if OR Company’s
provided for) As provided in the Articles.
Company’s Articles
Resignation of Secretary needs to N/A Usual to have a Board meeting
secretary send a resignation board resolution
letter to the Board
Appointment of Directors MA 3 and MA 5 Usual to have a Board meeting
secretary S.270(1) CA board resolution
Appointment of Directors or MA 17(1)(b) Board Resolution Board meeting
directors shareholders MA 17(1)(a) OR OR
Ordinary Shareholder
Resolution (more meeting (as
than 50% of applicable)
shareholders)
Resignation of Director needs to MA 18(f) Usual to have a Board meeting
directors send resignation board resolution to
letter to the Board accept resignations
Appoint new Directors vote for a MA 12(1) Board resolution Board meeting
chairperson chairperson
