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  • Created by: Lucy
  • Created on: 20-07-15 18:15
What basis do the board of directors run the business
on a day-to-day basis
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How many directors must all companies have ?
at least one director, a plc must have at least two
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What do executive directors do ?
perform specific roles in the day-to-day management of the company.
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What do non-executive directors do ?
attend board meetings but do not have a day-to-day role.
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What do non-executive directors contribute to ?
good corporate governance, ensuring continuing effectiveness of executive directors, providing an independent view of boards deliberations
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What are shadow directors ?
They control the company from the shadow
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who is De jure ?
anyone formally or legally appointed as a director
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How are directors appointed
according to the provisions of the articles normally by members at AGM via ordinary resolution or board to fill casual vacancy
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you can't be appointed a director if you have what ?
undischarged bankrupt, company auditor, anyone under the age of 16 and if the persons is named in the articles
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You can't be appointed as a director if you are disqualified by the court under Company Director Disqualification Act 1986 (CDDA) which could include what ?
Fraud, persistent failure to make annual returns, breach of duty in winding up, unfitness, following DBIS investigation, fraudulent or wrongful trading.
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What is the minimum/maximum ban for unfitness ?
Min 2 years max 15 years
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What would be counted as retirement ?
Written notice, failing to stand for re-election when term ends, dissolution of the company, being removed from office, being disqualified, death and bank rupt
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How many years in the cycle for re-election
3 year cycle
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What doe S.168 CA 2006 state ?
Ordinary resolution with special notice.
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What is special notice ?
50% + 1, must have at least 28 days notice before the meeting at which the resolution is to be presented to the members.
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What rights do directors have
to circularise members and to attend and address meeting
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What may render the removal from office ?
weighted voting rights
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What may give grounds for winding up on ust and equitable basis ?
removal of director in a partnership type company
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Ebrahimi V Westbourne galleries
E + N owned 50% each, were directors of company. Agreed to allow N's son to take 20% of company, 10% from each. Ns removed E under S.168. Held: grounds for winding up as W was effectively similar to partnership.
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What could the company still be liable for
breach of service contract
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Directors act as board and decisions should be taken collectively where ?
at board meetings unless the board has delegated authority to sub-committee or to an individual director.
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Model articles give the board the right to what ?
manage the company and to exercise all the powers of the company. - Company don't have to adopt model articles.
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Who are the agents of a company ?
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What does S.40 CA 2006 state ?
A third party acting in good faith can rely on the power of the board of directors to bind the company.
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How do directors become managing directors
they are appointed by board under powers given by model articles.
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If they are removed as MD will they remain a Director ?
yes, until removed by the members.
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What authority does managing directors have ?
implied actual authority to bind company in all commercial contracts.
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Can a 3rd party rely on a MD even if they aren't correctly appointed ?
yes because they are the MD
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Who needs a company secretary ?
Every plc
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who appoints and removes a company secretary ?
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Can the secretary be a sole director ?
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How can a director of a plc ensure that the secretary is suitably qualified
occupied position of Company secretary for 3 of last 5 years, qualified accountant, qualified lawyer, appears capable by virtue of experience or qualificatons.
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What do the duties of a secretary include ?
arranging meetings, signing forms + returns, maintaining register of members.
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Who do company secretary have implied authority to bind ?
all administrative contracts
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Panorama developments V fidelis furnishing fabrics
Company secretary hired limousines on behalf of the company + used to ferry his family to + from airports. Held: hiring cars was within his apparent authority as a company secretary.
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Directors duties are now embedded where ?
in the companies Act 2006
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Directors have a duty to act within their powers which is what ?
Observe constitution, exercise powers in what they believe to be best interests of the company and exercise powers for a proper purpose.
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Who can apply to the court to declare that a transaction under S.171 should be set aside ?
Any shareholder
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Howard Smith ltd V ampol petroleum ltd
Majority shareholders opposed takeover. Directors believed takeover to be in best interests of company so allotted shares to bidders to allow them to push takeover.Held: allotment invalid.
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Bamford V bamford
Shares issued to prevent a takeover. Members subsequently ratified the directors actions, with members not voting.Held: share issue valid despite breach of fiduciary duty by directors.
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What must directors consider under their duty to promote the success of the company (s.172)
Long-term consequences of decision,interest of employees,need for good relationships, impact of company on local community + environment, importance of high standards of business conduct + reputation + acting fairly towards akk nenvers
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Under the duty to exercise independent judgement S.173 what must directors not do
delegate powers of decision making or be swayed by others.
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How must a director exercise his duty to his company
by exercising the same standard of care, skill and diligence that would be exercised by a reasonably diligent person with knowledge, experience and skill expected of a person to carrying out the role or director + that the director possess.
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What does the actual knowledge, experience + skill of a director include ?
Comply with companies act and the companys constitution and other relevant legislations, not to act negligently, no need for continuous attention, may delegate, no special skill or qualifications are required but expected to use them if have them.
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Dorchester finance co V stebbing
A long qualified accountant was expected to have greater knowledge of the rules surrounding loans to directors than other directors.
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What is the duty to avoid conflicts of interests main aim
duty of utmost good faith.
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Who is duty to avoid conflicts of interest owed to ?
the company not individual shareholders, employees or creditors.
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The articles may permit conflict of interest by who ?
independent directors
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When will directors not be liable for conflict of interest ?
if they comply with any lawful article that deals with the potential conflict.
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Who must the directors disclose all relevant information to ?
the company
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When must a director account to the company
for profit made from his position as director, whether that profit arises directly or indirectly.
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When is the duty to avoid conflicts of interest irrelevant.
its not, it is irrelevant whether the company suffers a loss or not.
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IDC v cooley
C as MD of IDC tendered for business with Eastern Gas. E made it clear they would not award the work to IDC. E offered work to C personally. C left IDC, feigning illness + carried out the work. IDC subsequently sued C for the profit on the contract.
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Baker V Gibbons - client list
Director in breach of fiduciary duty for using confidential company information for his own purposes during or after his period of employment.
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CMS Dolphin ltd V sigmonet ltd
Director in breach of fiduciary duty for persuading former clients to join his new company.
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What do directors need to ensure that they don't accept under the duty not to accept benefits from 3rd parties S.176
Directors must not accept benefits that could give rise to a conflict of interest.
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What must directors disclose to the board in terms of the duty to declare interest in proposed transactions or arrangement S.177
Disclose nature and extent of interest to board. e.g. loans to director.
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How must they disclose the interest?
in writing or verbally at board meeting.
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What are the consequences of breach of duty S.178
Civil liability, damages, restoration of company property, repayment of profits made by director, rescission of contracts for non-disclosure of interest. Articles can authorise an action that might otherwise be a breach of statutory breach.
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Directors service contracts must be approved by members if they are more than how many years
2 years
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what must be approved by members S.197/.198
loans and quasi loans
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non-contractual payments for loss of office must be approved by who ?
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directors may not acquire a non-cash asset from the company without approval of the members unless what ?
asset value is less than the lower of £5K or less than 10% of company's asset values.
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Other cards in this set

Card 2


at least one director, a plc must have at least two


How many directors must all companies have ?

Card 3


perform specific roles in the day-to-day management of the company.


Preview of the back of card 3

Card 4


attend board meetings but do not have a day-to-day role.


Preview of the back of card 4

Card 5


good corporate governance, ensuring continuing effectiveness of executive directors, providing an independent view of boards deliberations


Preview of the back of card 5
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