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LPC Business Law & Practice Summary

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A concise summary of the Business Law and Practice module on the LPC at Nottingham Law School. It covers all the topics on the module, including, but not limited to allotment of share, company decisions making, insolvency procedure, antecedent transactions and dividends. The notes are organised in ...

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  • February 24, 2021
  • 20
  • 2018/2019
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`LPC BUSINESS LAW AND PRACTICE SUMMARY

Exam Tips:
• Identify the relevant law/subsection/Model Articles
• Explain the law and your reasoning – in your own words
• Apply the law to the facts – THIS IS VERY IMPORTANT
• Ensure that you specify the subsections in each statute – you will lose marks if you don’t
• Always check BOTH Companies Act 2006 (“CA 2006”) and Model Articles (“Art”) for provisions to
identify who is responsible for making decisions
• Might have to pick out errors in drafting

Common Conduct Issues:
• Conflict of interest – Principle 2, O(3.5), O(3.6), O(3.7) – ensure you list both exceptions
• FSMA 2000 REGULATIONS


KEY STATUTORY PROVISIONS
• A company must have a registered office at all time – s86 CA 2006
• A company may change its registered address by giving notice to the Registrar – s87 CA 2006
• Amendment of article must be by special resolution – s21(1) CA 2006
• If a company amends its articles, it must send a copy of the amended articles to the registrar within 15
days of amendment – s26(1) CA 2006
• Documents sent by a company are deemed to be delivered 48 hours after they were posted – s1147 CA
2006
• If type of resolution is not specified, then you only need an ordinary resolution – s281(3) CA 2006


GENERAL PROCEDURE FOR COMPLETING A PROPOSED TRANSACTION
1. Directors call a board meeting to discuss proposed transaction - Art 3, 5, 9
• Ensure meeting is quorate (i.e. at least 2 directors are present) – Art 11(2)
• Give reasonable notice of meeting – Art 9
o Notice of a director’s meeting need NOT be in writing – Art 9(3)
2. If transaction requires shareholder approval, pass a board resolution to call a general meeting
• Identify the type of resolution shareholders need to pass
3. Directors call a general meeting of shareholders (s302 CA 2006) OR pass a written resolution (s288 CA
2006)
• Must give at least 14 days’ notice of the general meeting (s307(1) CA 2006)
• Can give a short notice (s307(4) CA 2006) or pass written resolution to avoid 14-day notice
requirement
4. Shareholders vote on the issue by poll vote/show of hands
5. If shareholder resolution passes, directors must have another board meeting to vote on the proposed
transaction
6. Directors must declare or disclose any conflicts of interest at the board meeting – s177 & Art 14
• Must check company’s articles to see if declaration of a conflict of interest prevents a director from
being counted as part of quorum
7. Directors implement the proposed action/transaction
8. Directors must also file all the necessary paperwork after the meeting to comply with internal and
external requirements


1

,FILING REQUIREMENTS
Internal Documents External Documents to send to (Companies House)
Every company must keep a: Every company must:
• Register of members – s113(1) CA 2006 • Send a copy of every resolution or agreement to the
• Register of Directors (open to public registrar within 15 days after it is passed or made –
inspection) - s162(1) CA 2006 s.30 CA 2006 (general filling requirements)
• Register of Directors’ Residential addresses– • Notify the registrar within 14 days of:
s165(1) CA 2006 - a person ceasing to become a director; or
*this is NOT open to public inspection - a change in register of directors or register of
• Register of People with Significant Control directors’ residential addresses
(PSC) (Auth: s167 CA 2006)
• Formal record of board decisions for at least • Keep a PSC register at Companies House and file any
10 years – Art 15 changes to the PSC using the PSC forms below
• Formal record of board meetings for at least within 14 days – s790VA CA 2006
10 years – s248(1) CA 2006
• Formal record of all GM minutes and Types of Companies House Forms
resolutions passed by shareholders – s355 CA • IN01 – Application to register a company
2006 • AP01 – Appointment of a director
• PSC register at their registered address and • SH01 – Return of allotment of share
reflect any changes to the PSC register within • SH03 – Return of purchase of own shares
14 days of the change – s790M(2) & Schedule • SH06 – Notice of cancellation of share
1A & 1B of Register of People with Significant • PSC01 – Notice of person with significant control
Control Regulations 2016/339 • PSC04 – Change of details of person with
significant control
• PSC07 – Notice of ceasing to be a person with
They must also: significant control
• Issue a new share certificate on every • TM01 – terminate appointment of a director
allotment or transfer of shares – Art 24 & s769
CA 2006


PEOPLE WITH SIGNIFICANT CONTROL - Schedule 1A & 1B of Register of People with Significant Control
Regulations 2016/339
• An individual has significant control of a company if they:
1. Directly or indirectly hold more than 25% of the share
2. Directly or indirectly hold more than 25% of voting rights
3. Directly or indirectly hold the right to appoint or remove a majority of the director
4. Otherwise have the right to exercise, or actually exercise, significant influence or control
5. Have the right to exercise, or actually exercise significant influence or control over the activities of a
trust or firm which is not a legal entity, but would itself satisfy any of the first 4 conditions if it were
an individual

TYPE OF ADVANTAGES DISADVANTAGES FORMATION REQUIREMENT
BUSINESS
SOLE TRADER • No double taxation • Ends on death of owner • None
• Easy & cheap to start • No separate personality
• Unlimited personal
liability


2

, PARTNERSHIP • Easy & cheap to • Unlimited personal • Partnership is formed
create liability whenever 2+ people carry
• Can arise with or • Partners are jointly and on a business with a view to
without a formal severally liable for make profit
partnership business debts/failure
agreement (I.e. • No separate legal
formally or personality
informally) • Ends on dissolution of
• No formal disclosure partnership or death of
or filling partner
requirements • Have to pay all costs
themselves
• Taxed on profit share
COMPANY • Separate legal entity • Double taxation - 1. Send Application form
• loss is limited to • Can be costly to start (IN01) with memorandum
investment • Directors can be of association + Articles of
• Lives forever (I.e. personally liable for association
perpetual succession) wrongful trading 2. Pay Fee: £10 electronic,
• Can issue shares to • Cannot use corporate veil £12 web filing or £40
raise capital to escape an existing legal paper
• Easier to get a bank obligation
loan • Must comply with Afterwards, you:
statutory disclosure and • Will receive a certification of
filling requirements incorporation and a company
number
• Must choose a company
name and check the name
requirements (s.53-58 & s.75-
77 of Companies Act)

RESOLUTIONS AT GENERAL MEETING – s301 CA 2006
• Are validly passed if:
1. Notice of the meeting and the resolution is given; and
o Notice of the meeting must include the text of the resolution and specified intention to propose
a special resolution - s283(6)(a) CA 2006
2. The meeting is held and conducted

WAYS TO CALL A GENERAL MEETING:
1. Directors call a general meeting – s302 CA 2006
2. Shareholders representing at least 5% of the paid-up capital of the company require directors to call a
general meeting – s.303 CA 2006
• Must give at least 14 days’ notice to call a general meeting – s.307(1) CA 2006
• Notice of a general meeting must state the time, date and place of the meeting – s.311(1) CA 206
• To avoid notice requirement: Short Notice (s.307(4)-(6)) or pass a written resolution

SHORT NOTICE/CONSENT TO SHORT NOTICE - s307 (4)-(6) CA 2006
• A method of shortening the notice period for calling a general meeting
• A general meeting can be called by shorter notice then otherwise required if shareholders agree –
s307(4) CA 2006
• The shorter notice must be agreed to by:
3

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