Shareholders

Question 1

A client is the sole shareholder and director of a private limited company with Model Articles (unamended). The company needs to raise money to be able to expand and the client’s mother has offered to invest £50,000 in the company in return for 50,000 new £1 ordinary shares.

Which of the following best describes the rights and duties of the client’s mother if she becomes a shareholder?

Answer 1

The client’s mother will be entitled to vote on a change to the company’s articles of association.

Question 2

Your firm provides company secretarial services to a private company limited by shares. This includes maintaining the company’s register of members. A person, B, has appointed a nominee, N, to hold the legal title in their shareholding of 100 shares. B owns the entire beneficial interest in the shares.

Which of the following statements best describes what should be detailed in the company’s register of members?

Answer 2

The required details of N.

Question 3

A private company limited by shares, incorporated in 2020, has agreed to allot 150 shares to A, a new shareholder. There is a planned meeting of shareholders in the coming days and the company wants to know whether the new shareholder should be given notice of the meeting.

Which of the following statements best describes the point at which the new shareholder’s membership of the company will take effect?

Answer 3

On the registration by the company of the new shareholder as a member.

Question 4

A private company limited by shares has called a shareholders’ meeting to vote, as required by its articles of association, on the appointment of a new director. The appointment is potentially contentious. One of the shareholders, aware of this, is concerned as to their duty in exercising their vote.

Which of the following statements best describes the basic position as to how the shareholder may exercise their voting right?

Answer 4

They may exercise their vote as they wish to the exclusion of any conflicting interests of other shareholders.

Question 5

A private limited company, with unamended Model Articles, is seeking an investment of £100,000. The board of directors must decide whether the company borrows the money from its bank or whether it issues further shares in the company. The directors of the company want to understand the difference between borrowing the money and accepting an investment in return for shares.

Which one of the following correctly describes the rights and/or obligations of new shareholders of the company?

Answer 5

They will be entitled to vote on a decision to change the company’s constitution.

Question 6

A shareholder in a private company limited by shares has been approached by two of the other five shareholders with a proposal that they enter into a shareholders’ agreement. The purpose of this would be to ensure compatibility in the voting by the three of them on appointments of any new directors and allotments to new shareholders.

Which of the following statements best describes the status of any such an agreement?

Answer 6

It will bind the three shareholders who are party to it.