Choose the necessary actions to generate a complete corporate procedure plan for a private company. All section references are to the Companies Act 2006 unless stated otherwise. Please email James Jirtle with any errors or omissions.
All section references are to the Companies Act 2006 unless stated otherwise. These procedures are for private companies, although some will apply to public companies as well. Developed by James Jirtle http://jamesjirtle.com/cgp/
Directors can enter into most contracts under their general powers MA 3 / TA 70, and will need to authorise someone to execute the contract on the company’s behalf.
Directors can change the registered address under their general powers MA 3 / TA 70 by giving notice to the registrar s87(1) using AD01. The change takes effect on notice, but the old address remains valid for service for 14 days s87(2).
Directors can change the accounting reference date under their general powers MA 3 / TA 70 by giving notice to the registrar s392(1) using AA01.
A company may amend its articles by SR s21. These must be filed with the registrar s26 along with a copy of the SR ss29-30.
A company may change its name by SR s77. It must give notice to the registrar s78(1) using NM01 and submit a copy of the SR ss29-30. The change of name is not effective until the registrar issues a new certificate of incorporation s81.
Directors can enter into most loans (other than those to directors) under their general powers MA 3 / TA 70. If the company is offering security for the loan, the charge may (and should) be registered with Companies House within 21 days s859A. Unregistered charges are void on insolvency s859H. The company must also keep copies of debentures s859P available for inspection s859Q. Before 6 April 2013, registration of charges was required s860 within 21 days s870. Unregistered charges were void on insolvency s874(1) and failure to register was an offence s860(4). This mandatory registration scheme was replaced by SI 2013/600.
A company must not register a transfer of shares unless a proper instrument of transfer has been delivered to it s770 (i.e. one that can be stamped s776(2)). Directors may refuse to register a share transfer s771(1)(b), MA 26(5) (Table A: if the shares are not fully paid (or in other specific circumstances) TA 24) but the company must give reasons for the refusal within 2 months s771(1). On registration, the company will need to issue new share certificates s776(1) and update its register of members s113.
Directors can appoint a new director MA 17(1)(b) / TA 79 (although under pre-2007 versions of Table A the director can only serve until the next AGM unless reappointed at that meeting). The company must update its register of directors s162 and register of directors’ residential addresses s165, and must notify the registrar within 14 days s167(1)(a) using AP01.
Members must pass an OR before the company can enter into a service contract with a director for more than two years s188(2)(a). A memorandum with the proposed contract must be circulated with the WR s188(5)(a), or be made available at the GM and for 15 days before (including the date of the meeting) s188(5)(b). A copy of the contract must be kept available for inspection s228.
Members must approve transactions by OR s190(1) where
Members must pass an OR to approve a loan to a director or a guarantee on his behalf s197(1). Similar provisions apply to quasi-loans s198, loans and quasi-loans to connected persons s200, and credit transactions s201. These do not apply to
A memorandum must be circulated with the WR s197(3)(a), or be made available at the GM and for 15 days before (including the date of the meeting) s197(3)(b), setting out the
A director may resign by giving notice to the company MA 18(f) / TA 81(d). The company must update its register of directors s162 and register of directors’ residential addresses s165, and must notify the registrar within 14 days s167(1)(a) using TM01.
A director may be removed from office by OR passed at a GM s168(1) following special notice s168(2), notwithstanding any agreement between the company and the director (i.e. the director's employment contract) or any provision in the company's articles.
Because special notice is required, the resolution will not be effective unless notice of the intention to move it has been given to the company at least 28 clear days before the meeting s312. The company must, where practicable, give its shareholders notice of such a resolution in the same manner and at the same time as it gives notice of the meeting s312(2). Where this is impractical for the company, it must give notice by newspaper advert (or as otherwise permitted by articles) at least 14 clear days before meeting s312(3).
The director is entitled to be heard on the resolution at the GM and may make representations which are to be distributed to members in advance (if received in sufficient time) or read out at the meeting s169.
To re-register as a public company a company must first
The company must also appoint a company secretary s271 who meets the qualifications in s273. This can be done (Table A: by the directors under TA 99 or) by including a statement of proposed secretary s95 with the company’s application for re-registration s94(1)(b).
The members must pass SRs to approve the re-registration s90(1)(a), change the company’s name to include plc or Public Limited Company s90(3)(a) and alter the articles so that they are suitable for a public company s90(3)(b).
The company must submit an application for re-registration using RR01 accompanied by
The re-registration is effective when the company is issued with a new certificate of incorporation s96(4)(a).
In general, directors cannot allot without authorisation s549. Directors of a private company with one class of shares may allot shares under s550, subject to any restrictions in the articles. For companies incorporated before 1 October 2009, the power to allot under s550 may need to be activated by OR SI 2008/2860 sch2 para 43.
For companies incorporated before 1 October 2009, check that any limit on Authorised Share Capital (ASC) in the company’s memorandum is sufficient for the allotment. The ASC operates as a restriction in the articles s28(1) and can be removed by OR SI 2008/2860 sch2 para 42.
New equity securities s560 must first be offered pro rata to existing members on the same or more favourable terms s561(1) for at least 14 days s562. Pre-emption rights do not apply when
For private companies with one class of shares, statutory pre-emption rights can be disapplied by a provision in the articles s567 or by SR s569.
After receiving authorisation and disapplying pre-emption rights (if necessary) the directors will need to allot the shares and, on receipt of payment and within 2 months of allotment s769, seal and issue the share certificates. The company must send any OR removing the ASC limit SI 2008/2860 sch2 para 42(3) and any OR activating directors’ powers under s550 SI 2008/2860 sch2 para 43(3) to the registrar within 15 days, and SH01 within 1 month of the allotment s555.
In general, directors cannot allot without authorisation s549. Members may authorise directors to allot shares by OR s551(1). The resolution must state
For companies incorporated before 1 October 2009, check that any limit on Authorised Share Capital (ASC) in the company’s memorandum is sufficient for the allotment. The ASC operates as a restriction in the articles s28(1) and can be removed by OR SI 2008/2860 sch2 para 42.
If the company wishes to create a new class of shares the members must either pass a SR amending the articles or an OR under MA 22(1) / TA 2.
New equity securities s560 must first be offered pro rata to existing members on the same or more favourable terms s561(1) for at least 14 days s562. Pre-emption rights do not apply when
For acts under a general authority, pre-emption rights can be disapplied by SR for as long as the authority to act is valid s570. For acts under a specific authority, pre-emption rights can be disapplied by SR s571 where
After receiving authorisation and disapplying pre-emption rights (if necessary) the directors will need to allot the shares and, on receipt of payment and within 2 months of allotment s769, seal and issue the share certificates. The company must send the OR giving directors the power to allot to the registrar within 15 days s551(9), and SH01 within 1 month of the allotment s555.
In general, a private company may not purchase its own shares s658(1). There are two exceptions for buybacks out of profits
In both cases
For market purchases under s701, the terms of the contract must be authorised by OR s701(1) specifying the maximum number of shares and maximum and minimum prices that may be paid s701(3). This authority lasts for a maximum of 5 years s701(5). Note This option is not detailed in the procedure plan below.
For off-market purchases, the terms of the contract must be authorised by OR s694(2) and a copy of the contract must be available for inspection at least 15 days before the GM and at the GM or circulated with the WR s696(2). This authority lasts for a maximum of 5 years s694(5).
In all cases, the company must send SH03 Return of purchase of own shares s707 and SH06 Notice of cancellation of shares s708 to the registrar within 28 days.
The amount by which the company's share capital is diminished (taking into account any fresh issue s733(3)) must be transferred to the capital redemption reserve s733(2), which is treated as part of the paid up share capital s733(6). Bought-back shares are treated as cancelled s706(b)(i).
In general, a private company may not purchase its own shares out of capital s658(1) except by following the procedure in s709. For the buyback to proceed
The terms of the contract must be authorised by OR s694(2) and a copy of the contract must be available for inspection at least 15 days before the GM and at the GM or circulated with the WR s696(2). This authority lasts for a maximum of 5 years s694(5). Additionally
Following authorisation of a purchase out of capital, the directors must
Creditors and other shareholders have a 5 week period from SR in which to object s721.
The company must send SH03 Return of purchase of own shares s707 and SH06 Notice of cancellation of shares s708 to the registrar within 28 days .
The amount by which the company's share capital is diminished (taking into account any fresh issue s733(3)) must be transferred to the capital redemption reserve s733(2), which is treated as part of the paid up share capital s733(6). Bought-back shares are treated as cancelled s706(b)(i).
A private company may reduce its share capital by passing a SR supported by a solvency statement s641(1)(a), provided the company’s articles do not prohibit it s641(6). The directors must state that the company is solvent and will remain so for the next 12 months after the reduction of share capital s643(1). The statement must be made within 15 days of the resolution being passed s642(1)(a), must be signed by all directors SI 2008/1915 s2, and must be circulated with the WR s642(2) or made available at the GM s642(3).
After the resolution is passed, the directors must sign a statement that the SR was passed within 15 days of the solvency statement being made s644(5) and must deliver this, along with the solvency statement s644(1)(a), a statement of capital s644(1)(b) and SH19 to the registrar within 15 days s644(1). The reduction of capital takes effect on registration of these documents s644(4).
The value of the cancelled shares becomes distributable profit, which can be used to pay for the shares or held in reserve for other actions requiring payment out of profit (e.g. payment of dividends).
Directors may decide to pay interim dividends MA 30(1) / TA 103. A company must have profits available to make a distribution s830(1). These are calculated by reference to the company’s “relevant accounts” s836, normally its most recent annual accounts.
Distributions in excess of a company's available profits are unlawful, and are liable to be repaid by members who knew or had reasonable grounds for believing that the distribution was unlawful s847(2). Directors who authorise payment of an unlawful dividend are in breach of their statutory duties (e.g. to exercise reasonable care and skill s174).
A company may declare final dividends by OR MA 30(1) / TA 102. The amount approved by members cannot exceed that recommended by the directors MA 30(2) / TA 102. A company must have profits available to make a distribution s830(1). These are calculated by reference to the company’s “relevant accounts” s836, normally its most recent annual accounts.
Distributions in excess of a company's available profits are unlawful, and are liable to be repaid by members who knew or had reasonable grounds for believing that the distribution was unlawful s847(2). Directors who authorise payment of an unlawful dividend are in breach of their statutory duties (e.g. to exercise reasonable care and skill s174).
Any director can call a board meeting MA 9(1) / TA 88 by
Directors must declare any interests in proposed transactions s177 unless
The minimum quorum is 2 directors MA 11(2) / TA 89.
Directors who have declared an interest cannot vote MA 14(1) / TA 94 and do not count towards the quorum MA 14(1) / TA 95. This restriction can be disapplied by OR MA 14(3)(a) / TA 96.
Each director has one vote and decisions are by simple majority MA 7(1) / TA 88. The Chairman has the deciding vote MA 13(1) / TA 88.
The board will resolve to
Notice must be given to the company’s
and must
Notice must be given at least 14 clear* days before the GM s307(1) (Table A: or 21 clear days where there is a SR TA 38). If notice is served by post or electronically, the notice period must include an additional 48 hours for deemed service s1147. *By s360
The meeting may be held on short notice s307(4-6) if
The quorum is 2 s318(2), TA 40, unless there is only 1 member s318(1).
The default method of voting is by a show of hands MA 42 / TA 46.
A poll vote can be demanded by
An OR is passed by a simple majority s282. A SR is passed by at least 75% of the vote s283.
The members will need to pass the following resolution(s):
Notice must be given to the company’s
and must
Special notice must be given at least 14 clear days before the GM s312(3) and generally at least 28 days prior to the GM s312(2). If notice is served by post or electronically, the notice period must include an additional 48 hours for deemed service s1147.
The quorum is 2 s318(2), TA 40, unless there is only 1 member s318(1).
The default method of voting is by a show of hands MA 42 / TA 46.
A poll vote can be demanded by
An OR is passed by a simple majority s282.
The members will need to pass the following resolution:
The WR must be circulated to all eligible members s291(2). Eligible members are those who would have been entitled to vote on the date of circulation s289(1).
In addition to the resolutions, the written resolution should contain
Each eligible member has one vote for each share they own s284(1)(a). The resolution is passed when the requisite majority of votes from all eligible members have been received: for a SR at least 75% s283(2); for an OR, a simple majority s282(2).
The members will need to pass the following resolution(s):
The meeting must be held on adequate notice and satisfy the quorum requirements, as above. The directors must also declare any undeclared interests.
The board will resolve to
The Chairman will direct that any necessary administration is carried out.
The directors will also need to sign a statement that the SR to reduce share capital was passed within 15 days of the solvency statement being made s644(5).