-A company is always liable without limit for its own debts.

-Where a public limited company fails to obtain a trading certificate, a member-director may be personally liable as a result. This is one example of statute lifting the corporate veil.

Lani and Seamus are planning to set up a public company selling electrical goods at discounted rates. They ask for your advice on the following matters:

-Can it be an unlimited company?

-Can the company commence trading once it is incorporated, provided they obtain a trading certificate within the first 12 months following incorporation?

Ashley and George, the directors of Pending Ltd, a fantastically successful company with a high public profile, plan to re-register their company as a public limited company. They have never had a company secretary before because Ashley has always dealt with that side of things. The company has a share capital of £50,000.

-Do they need to appoint a company secretary?

-Do they need to increase the share capital of the company?

Which of the following statements is incorrect?

Richard is applying to register a new company called Original Ideas Ltd, which has a share capital of £100 (100 shares at £1 nominal value).

-As part of the application, does Richard need to submit a statement of guarantee?

-As part of the application, does Richard need to submit a statement of proposed company officers?

Within what time period following the end of the relevant accounting reference period must a public limited company file its accounts and reports?

Which of the following statements is correct only in respect of a public limited company?

-When a company applies for registration, a copy of its proposed articles of association must be supplied to the Registrar of Companies.

-A certificate of incorporation is conclusive evidence that a company is registered in accordance with the Companies Act 2006.

Mags incorporates her sole trader business, King Kilts, which manufactures high quality tartan kilts, under the name King Kilts Ltd. She lent King Kilts Ltd £20,000 and owns 95% of its shares. She continued to insure the company’s assets, including the factory, in her own name, as she had always done before incorporation. On New Year’s Eve, the factory was destroyed by fire. Which of the following best describes the legal position?

Jacinta is a sole trader making leather goods. She was advised by her solicitor to incorporate her business as a private limited company. She took this advice, buying 98 of the 100 shares in Lush Leather Ltd. The company's liabilities quickly exceeded its assets and the company became insolvent, owing £87,000.

Is Jacinta liable to indemnify Lush Leather Ltd against its debts?

With regard to the veil of incorporation that is said to exist between companies:

-As a general rule, is the veil lifted in the case of companies that are part of the same group of companies?

-Can a director who is also a shareholder ever be held liable for the debts of a private limited company?

Ginny and Isaac plan to set up a private limited company for their existing greengrocery business. They ask your advice on two matters:

- Do they need to obtain a trading certificate before they commence trading under the company's registered name?

-Will the company be required to hold an annual general meeting (AGM) within the first 18 months following incorporation?

What is the minimum share capital currently applicable to a new public company?        

Within what timescale must a private company file its accounts and reports after the end of the relevant accounting period?

A public company should obtain a trading certificate before it can commence trading. In this regard, which of the following is incorrect?

All of the following companies would be covered by the small companies regime under the Companies Act 2006 except one. Which is the exception?

  Turnover                                                   Balance sheet           Employees

A      Spring Ltd                                     £11.5m                         £5.5m                                                      19

B      Summer Ltd                                  £10.1m                         £4.8m                                                      51

C      Autumn Ltd                                  £10.5m                         £4.2m                                                      49

Danny and Emily propose to incorporate their business as tennis instructors. They have been advised that a private limited company is the most suitable.

-Do they need to appoint a company secretary?

-Assuming an auditor is required, will they need to appoint an auditor each year?

Shiram and Asif are in partnership together selling camping gear. They are thinking of incorporating the business as a private limited company and seek answers to the following questions:

-Would they still own all the assets of the business jointly?

-Would it mean that their liability for the debts of the company would be limited?

Are the following statements true or false?

- Public company may pass written resolution

-Private company may not pass written resolution

Wasim set up as a sole trader six years ago and the business grew quickly. A year ago the business was incorporated, and Wasim transferred all of his sole trader assets to the company. Wasim also sought investment for the business from a bank that issued an unsecured loan, and from five other shareholders. However, Wasim is now in financial difficulties and now wishes to sell some of the company's assets to raise funds to help him. Requirement:

-Who owns the assets of the business?

Following the collapse of Forest Ferns Ltd, Elodie is disqualified from being a director for five years. However, after three years, she sets up a company, Beach Holidays Ltd, of which she is a director and 95% shareholder. However, the foreign holiday market collapses and Beach Holidays Ltd goes into insolvent liquidation. Requirement:

-Which of the following best describes the legal position?

If a public company does business or borrows before obtaining a trading certificate from the 9 Registrar, the transaction is:

The followings are the three examples of where statute provides for the veil of incorporation to be lifted except:

In relation to re-registration of a company, which of the followings statement is incorrect ?

Paddy arranges for the registration of New Style Ltd. Before the company is incorporated, he enters into a contract on its behalf for the purchase of premises at a prime retail location. When the time comes for completion of the purchase, the vendor refuses to complete the transaction with New Style Ltd (which is now incorporated) as a matter of principle, because it dislikes some of the merchandise that New Style Ltd proposes to sell.

-Can New Style Ltd enforce the contract against the vendor?

-Can New Style Ltd ratify the contract for the purchase of the premises?

Quentin sets up a new company, Simple Solutions Ltd, to continue his existing business. Before Simple Solutions Ltd is incorporated, he enters into a contract on its behalf for the purchase of inventory with payment to be made 30 days later. When the payment date arrives, the newly registered company has no cash available because it has also committed large funds to taking a lease of its new premises.

-Can the seller of the inventory enforce the contract against Simple Solutions Ltd?

-Can the seller enforce the contract against Quentin?

Josephine was one of two directors (who were also members) of Tone-Up Ltd, a supplier of health and fitness products. She did the administrative work in relation to setting up the company. She included a provision in its articles that Tone-Up Ltd would always employ her as its company secretary on a salary of £12,000 p.a. She also had a separate contract appointing her as company secretary, but it made no mention of remuneration or termination. After a year, Tone-Up Ltd appointed John as company secretary and Josephine sued the company for breach of contract because the articles had been contravened and, she argued, the articles have contractual effect.

-Can Josephine rely on the articles to compel Tone-Up Ltd to pay her £12,000 p.a. in the absence of a term in her contract, during her period of office as company secretary?

-Can Josephine rely on the contractual effect of the articles to seek redress for breach of contract?

-A company’s articles of association can be altered by the passing of an ordinary resolution unless there is a provision for entrenchment, in which case a special resolution is required.

-A company may provide that a provision for entrenchment cannot be repealed.

Simon is a solicitor employed by Xcel Ltd. He also owns 5% of the shares in the company. His contract is silent as to remuneration but Xcel Ltd’s articles provide that the company’s solicitor will receive £10,000 p.a. In August, the company passes a resolution altering the articles to reduce the solicitor’s remuneration to £8,000 p.a. and to require all members to purchase 50 more shares at £5 each.

-Is the alteration of the articles to reduce the solicitor’s remuneration effective?

-Is Simon, in his capacity as company member, required to take up the extra 50 shares?

With regard to the statutory books and records of a registered company limited by shares

-Is a company required to keep a register of its directors’ residential addresses?

-Is a company required to keep a register of debenture holders?

Mark is the company secretary of Top Tents Ltd, a private company limited by shares. He seeks your advice on the following matters:

-Must the company provide a directors’ remuneration report?

-Must he file accounts and reports within nine months after the end of the relevant accounting

reference period?

A company’s confirmation statement must contain all of the following options except one. Which is the exception?

Nat, Jay and Meena are in the process of forming a company, Harwin, a company limited by guarantee, and will be subscribers to the company. They understand that they are required to complete a memorandum of association as part of the formation process.

-As part of the memorandum of association, will Nat, Jay and Meena be required to complete a statement that says they wish to form a company?

-As part of the memorandum of association, will Nat, Jay and Meena be required to complete a

statement that says they agree to take at least one share each?

Craig is the company secretary of Lotsaland Ltd. He regularly negotiates contracts for the company for the acquisition of small development plots and then passes the file on to the managing director, Malcolm, who enters into the contract on behalf of the company. Feeling under pressure to secure a particularly good deal on a site during Malcolm’s sabbatical, Craig enters into a contract for Lotsaland Ltd to borrow £15,000 so that it can secure the deal. When Malcolm returns, he is not happy with the borrowing arrangement made by Craig. Which of the following best describes the legal position?

Albert entered into a pre-incorporation contract on behalf of Stir Ltd. By whom and against whom may the contract be enforced?

Cabbit Ltd buys organic vegetables from growers and resells them to retail outlets. The Companies Act 2006 requires every company to keep adequate accounting records. In order to comply with this requirement of the Act, Cabbit Ltd’s accounting records must contain:

(1) a record of its assets and liabilities

(2) a statement of stock held by the company at the end of each financial year

(3) daily entries of income and expenditure

Which of the following companies is not required to appoint an auditor?

Ben sets up a new company, Water Art Ltd, to continue his existing business. At the same time as preparing the necessary documentation for incorporation, Ben exchanged contracts with Land Managers Ltd for the purchase of a small industrial unit for the business. He receives the certificate of incorporation for Water Art Ltd a day before completion is due on the purchase of the industrial unit. Land Managers Ltd fails to complete the sale because it has received a better offer.

-Can Water Art Ltd ratify the contract?

-Can Ben enforce the contract against Land Managers Ltd without the approval of the members of Water Art Ltd?

Derry plans to incorporate his business, a sports shop on Bromley High Street, as Sports International Ltd, but his business partner, Thelma, is worried about the choice of name. She seeks your advice on two points:

-Is the word 'International' in the proposed name prohibited?

-Could Thelma, who will own 60% of the shares in the new company, by herself change the company’s name at a later date?

Are the following statements true or false?

-If a promoter fails to submit a copy of a company's articles when it applies for registration, prescribed articles will operate as default articles.

-Where the articles contain provision for entrenchment, such provisions can only be altered by a court order.

A company is required by law to keep a record of its written resolutions and minutes of general meetings.

-Is it required to keep and maintain this record at the company's registered office?

-Is it required to keep such record for 10 years?

Are the following statements true or false?

-A company is required to keep a register of debenture holders. 

-Any person has the right to inspect any part of the Register maintained by the Registrar of Companies.

Niamh and Sue are considering incorporating their business but have been a bit deterred by the administrative burden that appears to apply to companies. They ask for your advice on two points:

-Do their accounting records need to show entries of income and expenditure on a daily basis?

-Will they need to prepare a directors' report and directors' remuneration report every year?

Plunge plc is a large public company which is not listed on any stock exchange. The directors are concerned that their personal details, including their names and remuneration packages will appear in the financial statements.

-Will the names of all the directors appear in the directors' report?

-Does the company have to publish a directors' remuneration report?

Danny and Emily propose to incorporate their business as tennis instructors. They have been advised that a private limited company is the most suitable.

-Do they need to appoint a company secretary?

-Assuming an auditor is required, will they need to appoint an auditor each year?

Which of the following resolutions is needed to remove an auditor from office?

Which of the following statements concerning the Companies (Miscellaneous Reporting) Regulations 2018 and disclosures in company financial statements is correct?

All of the following statements concerning the Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 are correct, except one.

Which is the exception?

Shiram and Asif are in partnership together selling camping gear. They are thinking of incorporating the business as a private limited company and seek answers to the following questions:

-Would they still own all the assets of the business jointly?

-Would it mean that their liability for the debts of the company would be limited?