This is a compilation of all of the practice questions from the SGS (Class) preparations as well as any other practice materials.
This is perfect for OPEN BOOK exams as they often repeat the same/same style questions in the exams so you can see how to go through a question. You just need to la...
Investor liability Unlimited personal Partners have unLtd Liability is Ltd: individual Liability is Ltd: members
liability personal liability on either members are not personally are only liable to pay any
a joint, or a joint and liable over and above their amount unpaid on their
several basis determined capital share in the LLP shares (s.3(2) )
by the nature of the
liability
Legal status of the Not a separate legal Not a separate legal Separate legal entity Separate legal entity
business medium entity. Sole trader = entity. Partners = the
the business and is partnership. Each partner
individually is individually
responsible. N.B Sole responsible.
traders may trade
under a different
business name.
No of people 1 Minimum of 2 Minimum of 2 Minimum of 1 person –
needed to set up s.7(1)
Start up expenses none necessary none necessary, although Incorp Co's. - Incorp Co's including
it is highly recommended Registration fee. memorandum and arts
to have a partnership Highly recommended to of association (arts
agreement drawn up by have a Ltd liability form the co’s
lawyers. partnership agreement constitution).
drawn up by lawyers. - Registration fee.
Printing of LLP stationary - Printing of co stationary.
(its name must appear on
all the same docs as
required of a co. (e.g.
letterhead, invoices, and
cheques).
Publicity + No disclosure required No disclosure required Registered office (s.2(2)(c) - Registered office (s86)
Disclosure a + (d) LLPA + 2009 Regs) - Accounts (s.441)
details of members - info on directors (and
(s.2(2)(e) LLPA) secretary if the co has 1)
details of ‘designated and members.
members’ (s.2(2)(f) LLPA) - info on the share capital
Accounts (2008 Regs) of a co.
Persons with Significant - A ‘PSC Register’ (see
Control (SBEEA 2015 LLPs LLPs)
need to keep a ‘PSC
Register’ that’s filed with
Co's House. It must be
updated to reflect a change
in PSC info within 14 days
Large LLPs are required to
publish deaileds of their
payment practices and
policies, bi-annually. An LLP
is large if it exceeds any 2
of the following: (1) annual
turnover of £36 million or
, more; (2) total assets on its
balance sheet of £18 million
or more; or (3) an average
of 250 employees
Ongoing Expenses none necessary, none necessary, although Accounts must be prepared Accounts must be
although usually usually accountants will by accountants annually prepared annually. Most
accountants will be be involved in keeping (2008 Regs) -Annual fee to Co's that do not qualify
involved in keeping accounts. pay to update any info. as ‘small’ must file
accounts. LLPs must file a audited accounts.
Confirmation Statement at Co's must file a
least once a year in Confirmation Statement
accordance with the SBEEA at least once a year in
2015 accordance with the
SBEEA 2015.
Mgmt Structure As the sole trader L3d out in partnership L3d out in partnership Meetings of the directors
wishes – no legal agreement. Default agreement, if 1 exists. There and the shareholders
requirements provisions in the is therefore nothing about are held in accordance
Partnership Act 1890 calling of (or procedure at) with the provisions of the
relate to issues such as meetings. 1 of the main + the co’s AoA. Model
partnership property, advantages of an LLP (along arts are the default arts
expulsion, retirement, etc with Ltd liability) is that at of association for private
operational level, there are Co's incorporated under
few of the formalities . Co’s can adopt their
associated with co mgmt own t3lor made AoA
procedures instead of the Model
arts.
Available financing Sole trader can Partners can borrow. LLP can borrow. Can create co can borrow. Can
methods borrow. Cannot create Cannot create floating floating charges. If any create floating charges.
floating charges. charges. Cannot raise financing is underwritten by If members give
Cannot raise finance finance by issuing a member’s personal personal guarantees, Ltd
by issuing shares. shares. guarantee, this effectively liability is lost. Can raise
removes the safety of Ltd finance by issuing
liability. Cannot raise finance shares – i.e. will be
by issuing shares – capital in easier for a Ltd co to
an LLP is not divided into obtain financing.
shares
SGS 1 ACTIVITY 1
1) Please write a brief checklist of practical/administrative matters that we need to consider or cover with Dominic
before we officially take him on as a new client.
Sole trader • Partnership • Ltd Liability Partnership • Private Ltd co • Public Ltd co
SGS 1 ACTIVITY 2
Private co Public co
Name must end with Ltd or ltd. (s.59(1)) public Ltd co or p.l.c. (s.58(1))
Minimum no of shareholders 1 (ss.7(1) + 8(1)) 1 (ss.7(1) + 8(1))
co secretary required No (s.270(1)) Yes (s.271)
Certificates required before Certificate of Incorp (s.15(4)) Can Certificate of Incorp (s.15(4)) Can’t commence business
commencement of trading commence business as soon as it’s until a trading certificate is issued by Registrar showing
incorporated that the co’s allotted share capital is not less than the
min (s.761(1)(2))
Minimum share capital to be Must have at least 1 share Minimum of £50k (or prescribed euro amount)
issued (s.8(1)(b)) (s.763(1)(a)(b))
Allows offer of shares to the Prohibited (s.755(1)) Permitted under (but FSMA imposes restrictions)
, public
Method of payment and No restriction on method of payment Payments in cash only or where consideration has been
minimum amount payable (s.582(1)(2)) Shares can be issued independently valued (s.593(1))
for share capital without immediate payment 25% of nominal value must be paid on allotment plus the
whole of any premium (s.586(1))
SGS 2: Ritchisons Intro
SGS 2 PRE SGS ACTIVITY 1
Part 1: Board Meetings
Board meetings are called by any director giving reasonable notice (BROWNE V LA TRINIDAD).
Model art 11(2) states that the quorum at a board meeting may be fixed from time to time by a decision of the directors bu
must never be less than 2, and unless otherwise fixed is 2.
Decisions at board level are made by board resolutions passed on a simple majority at a board meeting (MA 7(1)), or
alternatively, without calling a board meeting, by unanimity, for example, by written resolution (MA 7(1) + MA 8). A
chairman may have a casting vote which they may use in the event of a deadlock (check arts though as this entitlement
may be removed).
If a director abstains from voting on a decision, they do not count towards the number of people voting on that issue. So, o
a board with 5 directors, if 1 abstains, instead of counting the votes out of 5, you would count them out of 4. To get a
majority, you would therefore need 3 out of 4 directors voting in favour of the resolution.
Part 2: Shareholders and shareholder meetings:
Shareholders own the co + the directors manage it on a d3ly basis.
Shareholders’ meeting quorum = 2 (s318(2) ). Under s.318(1), where a co has only 1 member, only 1 qualifying person
present is sufficient.
Decisions are made at shareholder level on a show of hands unless a poll is demanded under MA 42. Under s.284(2) ,
when the shareholders vote on a show of hands, each shareholder who is present at the meeting will be entitled to 1 vote,
regardless of the number of shares held by that shareholder. Under s.284(3), when the shareholders are voting on a poll,
every shareholder has 1 vote in respect of each share held by them. Under s.284(4), a co can change the above position
by provisions in its arts. MA 44(1) provides that a poll can be demanded before the meeting, or at the meeting either befor
or immediately after a show of hands has taken place. MA 44(2) provides that the ch3rman of the meeting, the directors, 2
or more shareholders, or any member with not less than 10% of the voting rights of those entitled to vote on the resolution
can demand 1.
SGS 2 ACTIVITY 1 PART 2 PROCEDURE PLAN CHANGE OF NAME
What are the basic steps that need to be followed to put into effect the change of a co name?
Board Meeting 1 General Meeting Board Meeting 2
• Resolution to call • Notice period at least 14 clear days • Calling, notice, quorum and voting: same
• Called by any director on reasonable (s307(1) +s360(2)) as BM1
notice (MA9) Browne v La Trinidad • Quorum generally 2 (s318(2)) • Ch3rman reports that SR passed at GM
• Quorum 2 (MA 11(2)) • Shareholders pass SR to change name • Board resolutions to implement name
• Board GM (s302) to pass name change • Voting not less than 75% (s283(1)(4) + change (direct co secretary to deal with
SR (s77(1)) (5)) post meeting matters)
• Board Resolution to approve form of
notice. Voting by majority (MA 7(1))
Post Meeting Matters: File copy of Special Resolution (s.30(1)); file form NM01 Notice of change of name; write up minutes of BM1
BM2 + GM
SGS 4: Incorporating a Company
, *Note: there aren’t solutions for the pre-sgs activity, activity 1 & 2 (missing a lot of info from this sgs)
SGS 4 ACTIVITY 3
SGS 5: Company Procedure
SGS 5 ACTIVITY 1 Procedure for Conversion of a Shelf Company on Full Notice
Definitions:
Board Meeting I
1. Who calls? - any director (either Jennifer Harrower or John Gatson) could do so (MA 9(1)).
2. Notice period - reasonable according to what is usual for the co (Browne v La Trinidad).
3. Quorum - 2 (MA 11(2)), therefore both serving directors (Jennifer Harrower and John Gatson) must be present.
4. Agenda
4.1 Report on the formation of the co.
4.2 Propose board resolutions to:
a) appoint Margaret Fletcher and Thomas Young as directors (MA 17(1)(b)) (both appointments to take effect
immediately) and Tim Bradford as co secretary (with effect from John Gatson’s resignation as co secretary (see item
4.2(b) below)). John Gatson to stand down as chairperson and Margaret Fletcher to take the position of chairperson (MA
12(1));
b) accept letters of resignation from Jennifer Harrower, as a director, and John Gatson, as a director and co secretary
(both resignations to take effect immediately) (MA 18(f));
c) receive and approve the transfers of subscriber shares (s.771 + MA 26) and instruct the co secretary to enter the new
shareholder Ritchisons Holdings plc (‘RHP’) in the register of members immediately (s.112(2) + s.113(2)) and add a
statement in the register of members that the co has only 1 member (s.123(2));
d) approve the form of notice of GM. The contents of the notice will include:
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