ICSAN Secretarial Practice key terms

The primary constitutional document that states a company's name, registered office, objects, liability of members and authorised share capital, and governs the company's external relationship with the world.

The internal rulebook regulating how a company is managed, including appointment of directors, conduct of meetings, transfer of shares and use of the common seal, subordinate to the memorandum and the Companies and Allied Matters Act.

The provision in the memorandum listing the business activities a company is formed to pursue; acts outside it may be restrained by members or set aside as ultra vires.

The document issued by the Corporate Affairs Commission confirming that a company has been duly registered and has come into existence as a body corporate from the date stated on it.

The federal agency established under the Companies and Allied Matters Act that registers companies and business names and maintains statutory records, filings and public searches.

A legal entity created by law or registration that has its own personality, perpetual succession, capacity to own property, sue and be sued, distinct from its members and officers.

The courts' or statute's disregard of a company's separate personality so that members or directors can be made personally liable, for example where the company is used to perpetrate fraud.

The principle that members' exposure to a company's debts is capped at the amount unpaid on their shares, or at the amount they guaranteed, so personal assets are generally protected.

A company with share capital whose memorandum restricts share transfers, limits membership (commonly fifty) and bars public offers of its securities, identified by the suffix Limited or Ltd.

A company whose memorandum permits it to offer shares or debentures to the public, requires a minimum of two members, a company secretary and a statutory audit, and is identified by the suffix Plc.

Beyond the powers. An act is ultra vires where it falls outside the objects in the memorandum or the authority conferred by statute or the articles, and may be restrained or invalid.

An agreement made on behalf of a company not yet registered; it binds the promoter personally unless the company later adopts it after incorporation in the manner the law allows.

A person who takes the initiative in forming a company, arranging its capital and registration, and who owes fiduciary duties of disclosure and good faith to the company and its investors.

The formal communication to members and auditors stating the date, time, place and business of a meeting, given within the statutory or constitutional period before it is held.

The minimum number of members or directors whose presence is required before a meeting can validly transact business, fixed by statute or the articles.

A decision passed by a simple majority of votes cast by members present and voting at a general meeting, used for routine matters such as declaring dividends or appointing auditors.

A decision requiring at least a three-quarters majority of votes cast at a general meeting, with proper notice stating the intention to propose it, used for fundamental changes such as altering the articles.

A notice given to the company by a member of an intention to propose a resolution or appoint a person at a meeting, required for sensitive matters such as removing a director or auditor.

The written record of proceedings and decisions at a meeting, entered in the minute book within the prescribed time and signed by the chairman as prima facie evidence of what occurred.

A meeting of the members of a company, whether annual or extraordinary, at which they exercise voting rights on resolutions concerning the company's governance and affairs.

The yearly meeting of members at which accounts, directors' and auditors' reports are laid, auditors appointed, directors elected and dividends declared, held within the statutory interval.

A person appointed in writing by a member to attend and vote at a meeting in the member's place, or the instrument of appointment itself, where the articles permit such representation.

A person appointed to manage the company's business and exercise powers on its behalf, owing duties of good faith, care and skill, and acting collectively as the board.

A person whose directions or instructions the directors are accustomed to follow, treated by law as a director for accountability purposes though not formally appointed to the board.

The obligation of directors and officers to act honestly and in the company's best interests, avoid conflicts of interest, and not misuse corporate property, information or position for personal gain.

The standard requiring a director to act with the degree of diligence, knowledge and judgement reasonably expected of a person of their experience in comparable circumstances.

The officer responsible for statutory compliance, maintaining registers and minute books, filing returns with the Corporate Affairs Commission, advising the board and ensuring proper meeting procedures.

The system of rules, practices and processes by which a company is directed and controlled, balancing accountability of the board with the interests of shareholders and stakeholders.

The total amount raised or to be raised by issuing shares, divided into nominal units, representing members' financial stake and the fund against which creditors may look.

The unconditional appropriation of new shares to a person by the directors under authority conferred by the members, creating membership rights on payment of the issue price.

The process by which a member passes existing shares to another person using an instrument of transfer, subject to any pre-emption or board approval requirements in the articles.

A written acknowledgement of indebtedness by a company, typically creating a charge over its assets and carrying fixed or floating security, interest and repayment terms.

A security interest over company property created to secure a debt, which must be registered with the Corporate Affairs Commission within the statutory period to be valid against creditors.

The statutory record of shareholders showing their names, addresses, shareholdings and amounts paid, which is prima facie evidence of membership and open to inspection.

The yearly statutory filing with the Corporate Affairs Commission confirming a company's registered particulars, directors, secretary, share capital and members, made within the prescribed period.

The bound record in which minutes of general meetings and board meetings are kept, retained at the registered office and open to inspection by members under statutory conditions.

An independent professional appointed by members to examine the company's accounts and report whether the financial statements give a true and fair view in accordance with applicable standards.

The audit benchmark requiring financial statements to present the company's financial position and performance honestly and in accordance with applicable accounting standards, free from material misstatement.

A committee of non-executive directors, with member representation as required, that oversees financial reporting, internal controls and the independence and performance of the external auditor.

A formal document inviting the public to subscribe for a company's shares or debentures, containing prescribed disclosures about the offer, the company and its promoters, and subject to regulatory approval.

The combination of two or more companies into a single surviving entity, effected through a scheme approved by members and, where required, sanctioned by the court or regulator.

The purchase by one company of control of another, whether by buying shares, acquiring assets or merging, often triggering disclosure, approval and competition-law requirements.

A court-sanctioned compromise or arrangement between a company and its members or creditors, commonly used to implement reconstructions, mergers and capital reorganisations.

The process of ending a company's existence by collecting its assets, paying its debts and distributing any surplus to members, whether voluntarily or by court order.

The practical work of realising a company's assets and settling its liabilities under a liquidator, carried out as part of winding up before the company is dissolved.

The financial condition in which a company cannot pay its debts as they fall due, or its liabilities exceed its assets, triggering rescue, administration or winding-up procedures.

A rescue procedure placing a company under an administrator who manages its affairs to keep it as a going concern or achieve a better outcome for creditors than immediate liquidation.

A person appointed, usually by a secured creditor under a debenture, to take control of charged assets, realise them and apply the proceeds towards the secured debt.

A legally enforceable agreement formed by offer, acceptance, consideration and intention to create legal relations, requiring capacity and legality to bind the parties.

A relationship in which one person, the agent, is authorised to act on behalf of another, the principal, creating rights and liabilities between the principal and third parties.

The agreement between employer and employee setting out duties, remuneration, hours, notice and termination terms, supplemented by statutory rights on wages, safety and unfair dismissal.

The ongoing obligation of a company and its officers to observe applicable statutes, regulations and codes, including filings, licences and sector rules, and to maintain systems evidencing that observance.