ICAB PL Corporate Laws and Practices flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Certificate of incorporation

Document issued by the Registrar evidencing that a company has been registered; it confers separate legal personality, and the company may sue and be sued in its own name.

Memorandum of association

Charter of the company stating its name, registered office, objects, liability of members and capital; it defines the scope of activities and governs relations with outsiders.

Articles of association

Internal rulebook regulating the management of the company, share transfers, meetings and powers of directors; it operates as a contract between the company and its members.

Authorised share capital

The maximum nominal value of shares a company may issue, as stated in the capital clause of the memorandum; increasing it requires member approval and Registrar filing.

Issued share capital

The portion of authorised capital actually allotted to subscribers and other shareholders; it may be less than authorised capital and can be increased up to that ceiling.

Paid-up capital

The amount of issued capital for which shareholders have actually paid, including calls received; uncalled amounts remain a liability of the shareholder to the company.

Special resolution

Resolution passed by at least three-fourths of votes cast at a general meeting, with proper notice stating the intention to pass it as a special resolution.

Ordinary resolution

Decision taken by a simple majority of votes cast by members present and voting at a duly convened general meeting; used for routine matters such as approving accounts.

Statutory meeting

Meeting public companies must hold within six months of commencing business, at which a statutory report on allotments, receipts and payments is placed before the members.

Annual general meeting

Meeting of members held each year to adopt accounts, declare dividends and appoint auditors; the first is due within eighteen months of incorporation and later ones within fifteen months of the previous.

Compulsory winding up

Winding up ordered by the court, typically on grounds of inability to pay debts, failure to commence business, or where it is just and equitable to do so.

Voluntary winding up

Winding up initiated by the members or creditors without court order; a members' voluntary winding up requires a declaration of solvency by the directors.

Unpublished price-sensitive information

Material information about a company not yet made public that could affect share price; trading on it by connected persons is prohibited and punishable as insider dealing.

Ultra vires act

An act beyond the objects stated in the memorandum; such an act is void and cannot be ratified even by unanimous consent of all shareholders.

Doctrine of indoor management

Outsiders dealing with a company may assume internal procedures were properly followed; protection does not extend where the outsider knew or suspected irregularity.

Lifting the corporate veil

Disregarding separate legal personality to reach the members or directors, applied in fraud, sham, agency, or statutory cases such as trading beyond permitted periods.

Board quorum

Minimum number of directors who must be present for a board meeting to transact valid business, set by the articles, usually one-third of directors or two, whichever is higher.

Independent director

Director with no material relationship with the company or its affiliates; listed companies must appoint a prescribed number under the corporate governance code.

Audit committee

Board committee of at least three members, majority independent and chaired by an independent director, overseeing financial reporting, internal controls and auditor independence.

Related-party transaction

Deal between the company and a director, substantial shareholder or their associates; interested directors must disclose, abstain and the terms must be arm's length.

Minutes of meeting

Written record of proceedings and resolutions, entered in the minutes book and signed by the chair; it serves as evidence of what was validly decided.

Register of members

Statutory record of shareholders showing names, addresses, shares held and dates of entry; it is prima facie evidence of shareholding and open to inspection.

Register of charges

Record of mortgages and charges created by the company, kept at the registered office; charges must also be filed with the Registrar within the prescribed period.

Proxy

Person appointed in writing by a member to attend and vote at a general meeting; the instrument must be deposited with the company before the meeting as the articles require.

Dividend declaration

Board recommends and members declare a dividend out of profits; payment must follow within the statutory period, with tax deducted at source and records maintained.

Unclaimed dividend transfer

Dividends not encashed within the statutory holding period must be transferred to the designated fund; the shareholder's right to claim may still be preserved.

Annual return filing

Statutory return filed with the Registrar after the AGM summarising share capital, directors, members and changes; late filing attracts additional fees and prosecution risk.

Director identification number

Unique number obtained by an individual before appointment as director; it is quoted in filings and consent forms to track directorships across companies.

Conflict of interest disclosure

Director's duty to inform the board of any interest in a proposed contract; failure may void the contract or make the director accountable for resulting gains.

Share transfer instrument

Duly stamped and executed document transferring shares; the board registers it, enters the transferee in the register of members and may refuse with reasons.

Price-sensitive information disclosure

Listed companies must promptly publish material information likely to affect share price, ensuring equal access and preventing selective disclosure to favoured investors.

Notice of general meeting

Written notice to members and auditors stating date, time, place and business, given within the statutory period; short notice requires the prescribed consent.