ICSAN CL cheat sheet

Separate legal personality: a company is a legal person distinct from its members and directors (Salomon v Salomon).

Lifting the corporate veil: courts may disregard separate personality where the company is a mere facade or used to evade legal obligations.

Directors' duties: act within powers, promote success of the company, exercise independent judgment, exercise reasonable care and skill, avoid conflicts, not accept benefits from third parties, declare interest in proposed transactions.

Duty to promote success: directors must act in good faith in the way most likely to promote the success of the company for the benefit of members as a whole, having regard to long-term consequences, employees, suppliers, customers, community, and environment.

Business judgment rule: directors are not liable for honest mistakes if they acted in good faith, on an informed basis, and in the best interests of the company.

Shareholder remedies: derivative action (claim brought by shareholder on behalf of company for wrong done to it), unfair prejudice petition (s 994), just and equitable winding up.

Board committees: audit committee (independent non-executives, oversees financial reporting and internal control), remuneration committee (sets executive pay), nomination committee (board appointments).

Governance codes: UK Corporate Governance Code applies to premium-listed companies on 'comply or explain' basis; key principles include board leadership, division of responsibilities, composition, audit/risk, remuneration.

Annual general meeting: public companies must hold AGM within 6 months of financial year end; ordinary resolutions require simple majority, special resolutions require 75% majority.

Statutory books: register of members, register of directors and secretaries, register of charges, minutes of board and general meetings, accounting records must be kept and available for inspection.

Company secretary role: ensuring compliance with statutory and regulatory requirements, maintaining statutory registers, organizing board and general meetings, advising board on governance.

Filing deadlines: confirmation statement at least every 12 months; annual accounts within 9 months of financial year end for private companies, 6 months for public companies.

Board meeting minutes: must record attendance, decisions, and any declarations of interest; minutes are prima facie evidence of proceedings.

Written resolutions: private companies can pass written resolutions without a meeting; must be signed by requisite majority; cannot be used to remove a director or auditor before term.

Meeting notice: 14 clear days' notice for general meetings of private companies (21 days for public companies), unless shorter notice agreed by requisite majority.

Quorum: minimum number of members required to be present for a meeting to be valid; typically two for general meetings unless articles specify otherwise.

Proxy: a member may appoint another person as proxy to attend and vote at meetings; notice of proxy appointment must be received by company before meeting.

Dividend procedure: board recommends final dividend, shareholders declare at general meeting; interim dividends declared by board based on distributable profits.

Accounting equation: Assets = Liabilities + Equity; must always balance.

Double-entry bookkeeping: every transaction has equal and opposite debit and credit entries; debit increases assets and expenses, credit increases liabilities, equity, and income.

Accrual basis: revenue recognized when earned, expenses recognized when incurred, regardless of cash flow.

Depreciation methods: straight-line = (cost - residual value) / useful life; reducing balance = carrying amount × rate.

Inventory valuation: lower of cost and net realizable value (IAS 2); cost includes purchase price, conversion costs, and other costs to bring inventory to present location and condition.

Revenue recognition (IFRS 15): five-step model-identify contract, identify performance obligations, determine transaction price, allocate price to obligations, recognize revenue when obligation satisfied.

Provisions and contingencies (IAS 37): recognize provision when present obligation from past event, probable outflow, reliable estimate; disclose contingent liability unless remote.

Consolidation: parent must consolidate subsidiaries it controls; control = power over investee, exposure to variable returns, ability to use power to affect returns.

Going concern: financial statements prepared on assumption entity will continue in operation for foreseeable future; if not, disclose material uncertainty.

Break-even point (units) = Fixed costs / Contribution per unit; contribution = selling price - variable cost per unit.

Margin of safety = (Actual sales - Break-even sales) / Actual sales × 100%.

Cost classification: fixed, variable, semi-variable; relevant costs for decision-making are future incremental cash flows that differ between alternatives.

Absorption costing: allocates fixed production overhead to units; marginal costing: treats fixed overhead as period cost.

Net present value (NPV): sum of present values of future cash flows minus initial investment; accept project if NPV > 0.

Internal rate of return (IRR): discount rate at which NPV = 0; accept project if IRR > cost of capital.

Weighted average cost of capital (WACC) = (E/V × Re) + (D/V × Rd × (1 - tax rate)).

Variance analysis: price variance = (standard price - actual price) × actual quantity; usage variance = (standard quantity - actual quantity) × standard price.

Payback period: time to recover initial investment from cash inflows; ignores time value of money and cash flows after payback.

Contract formation: offer, acceptance, consideration, intention to create legal relations, capacity.

Offer vs invitation to treat: display of goods in shop is invitation to treat; offer is made by customer at till, accepted by cashier.

Consideration: something of value given by each party; must be sufficient but need not be adequate; past consideration is not valid.

Terms of contract: express terms (agreed), implied terms (by statute, custom, or courts), conditions (major term, breach allows termination), warranties (minor term, breach allows damages).

Exclusion clauses: must be incorporated into contract, construed strictly contra proferentem; cannot exclude liability for death or personal injury caused by negligence (Unfair Contract Terms Act).

Sale of goods: implied terms that seller has right to sell, goods match description, goods are of satisfactory quality and fit for purpose (Sale of Goods Act).

Agency: agent acts on behalf of principal; principal bound by agent's acts within actual or apparent authority.

Partnership: two or more persons carrying on business in common with view of profit; partners jointly and severally liable for partnership debts.

Insolvency: administration (rescue), liquidation (winding up), voluntary arrangement; priority of creditors: secured, preferential, unsecured.

Corporation tax: levied on company profits (trading profits, investment income, chargeable gains); rates vary by profit level and jurisdiction.

Capital allowances: tax relief for capital expenditure on plant and machinery; annual investment allowance (AIA) provides 100% relief up to specified limit.

Value Added Tax (VAT): indirect tax on supply of goods and services; businesses must register if taxable turnover exceeds threshold; input tax recoverable against output tax.

Pay As You Earn (PAYE): system for collecting income tax and social security contributions from employees through payroll.

Transfer pricing: transactions between connected parties must be at arm's length; documentation required to avoid profit shifting.

Tax avoidance vs evasion: avoidance is legal use of tax rules to minimize tax; evasion is illegal non-disclosure or misrepresentation.

Fiscal policy: government use of taxation and spending to influence economy; expansionary (increase spending/decrease taxes) vs contractionary.

Double taxation relief: credit or exemption for foreign taxes paid on income also taxed domestically; governed by treaties.

Stamp duty: tax on transfer of shares and certain documents; must be paid and stamped before registration of transfer.

SWOT analysis: internal strengths and weaknesses, external opportunities and threats.

PESTLE analysis: political, economic, social, technological, legal, environmental factors affecting business.

Porter's Five Forces: threat of new entrants, bargaining power of buyers, bargaining power of suppliers, threat of substitutes, competitive rivalry.

Ansoff matrix: market penetration (existing products/markets), market development (existing products/new markets), product development (new products/existing markets), diversification (new products/new markets).

BCG matrix: stars (high growth, high share), cash cows (low growth, high share), question marks (high growth, low share), dogs (low growth, low share).

Stakeholder theory: business should consider interests of all stakeholders (employees, customers, suppliers, community), not just shareholders.

SMART objectives: specific, measurable, achievable, relevant, time-bound.

Change management: Kotter's 8 steps include creating urgency, forming coalition, creating vision, communicating vision, removing obstacles, creating short-term wins, building on change, anchoring in culture.

Compliance program: policies, procedures, training, monitoring, and reporting to ensure adherence to laws and regulations.

Risk management: identify, assess, mitigate, monitor risks; risk register records risks, likelihood, impact, owner, mitigation.

Anti-money laundering (AML): customer due diligence, record-keeping, suspicious activity reporting, staff training; applies to financial institutions and certain businesses.

Data protection: comply with data protection principles (lawfulness, fairness, transparency, purpose limitation, data minimization, accuracy, storage limitation, integrity and confidentiality, accountability).

Health and safety: employer duty to ensure health, safety and welfare of employees and others affected by business; risk assessments required.

Whistleblowing: protected disclosures by workers about wrongdoing; employer must not subject whistleblower to detriment.

Competition law: prohibits anti-competitive agreements (cartels) and abuse of dominant position; mergers may require notification.

Bribery and corruption: Bribery Act creates offences of bribing, receiving bribes, bribing foreign officials, and failure of commercial organizations to prevent bribery.

Corporate governance compliance: comply or explain against governance code; board must disclose how it has applied principles.

Ethical principles: integrity, objectivity, professional competence and due care, confidentiality, professional behavior.

Confidentiality: do not disclose information acquired in professional capacity without authority, unless legal or professional right/duty to disclose.

Conflicts of interest: identify, evaluate, and manage conflicts; disclose to clients and obtain consent where necessary.

Independence: auditor must be independent of client in fact and appearance; prohibits financial interests, close business relationships, and certain non-audit services.

Corporate social responsibility (CSR): business responsibility to act ethically, contribute to economic development, improve quality of life of workforce, local community, and society.

Sustainability reporting: disclosure of environmental, social, and governance (ESG) performance; frameworks include GRI, SASB, TCFD.

Ethical decision-making: consider stakeholders, consequences, duties, rights, and virtues; apply ethical tests (e.g., public disclosure test, golden rule).

Professional skepticism: attitude of questioning mind, alert to conditions indicating possible misstatement due to error or fraud.

Whistleblowing in ethics: internal reporting first; if not addressed, may report to regulator or external body if protected.

IT governance: framework ensuring IT aligns with business strategy, delivers value, manages risk, and optimizes resources; board accountable.

COBIT: framework for IT governance and management; defines processes and control objectives.

Cybersecurity: protection of information systems from theft, damage, disruption; key controls include firewalls, encryption, access controls, regular patching, incident response plan.

Data backup and recovery: regular backups, offsite storage, tested recovery procedures; disaster recovery plan (DRP) and business continuity plan (BCP).

Access controls: least privilege, role-based access, strong authentication (multi-factor), regular review of user access rights.

Cloud computing governance: due diligence on provider, data residency, security, exit strategy; shared responsibility model.

Digital signatures: electronic signature using public key cryptography; provides authentication, integrity, non-repudiation.

Privacy by design: embed data protection into design of systems and processes; data protection impact assessment (DPIA) for high-risk processing.

IT audit: evaluate controls over IT systems, including general IT controls and application controls; test effectiveness.