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Reviewing constitutional documents of a corporate borrower—checklist

Reviewing constitutional documents of a corporate borrower—checklist STOP PRESS: The Economic Crime and Corporate Transparency Act 2023 (ECCTA 2023) received Royal Assent on 26 October 2023. ECCTA 2023, Pt 1 contains a substantive package of proposals enhancing the role of Companies House and increasing the transparency of UK corporate entities. The provisions of the ECCTA 2023 come into force over an extended period. Many of the provisions in the legislation require detailed secondary legislation and guidance, and the construction of new technical processes and tools to implement the reforms. For more information, see Practice Notes: The Economic Crime and Corporate Transparency Act 2023—what Banking & Finance lawyers need to know, The Economic Crime and Corporate Transparency Act 2023—tracker and Corporate transparency reform—changes to company registers. What are a company's constitutional documents? Unless the context otherwise requires, a company's 'constitution' is defined under the Companies Act 2006 (CA 2006) to include: • the company's articles of association (the Articles), and • any resolutions and agreements affecting a company's constitution...

Incorporating a private company limited by guarantee—checklist

Incorporating a private company limited by guarantee—checklist For full details on the incorporation of a private company limited by guarantee, see Practice Note: Companies limited by guarantee. Matter to be considered or step to be taken Companies Act 2006 (CA 2006) reference (if applicable) Tick box when step complete or matter considered Preparing to incorporate a private company limited by guarantee Will the company be tailor-made on incorporation or purchased 'off the shelf'? If the company is to be tailor-made, proceed with the rest of this checklist. N/A Who are the initial members? There may be just one member. CA 2006, ss 9, 11 What will be the specified amount of the members' guarantee? CA 2006, s 11 Who are the initial directors of the company? A private company may have a sole director. CA 2006, ss 9, 154 Will the company appoint a company secretary? Private companies are not required to have secretaries. CA 2006, ss 9, 270 Is the company...

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Forms of business vehicle—fundamentals

There are many forms of business vehicle and it is important that the most appropriate form of vehicle is chosen to carry on a business; the choice of vehicle may have a bearing on the business’s success or failure.Not every vehicle will suit the needs and demands of a business. Each vehicle has its advantages and disadvantages. The decision as to which vehicle to use to carry on a particular business will be complex and is dependent on various legal, tax and commercial considerations; there may not be a perfect fit.In addition, the vehicle originally chosen to carry on a particular business may not continue to be the right choice for that business as it develops and matures. The vehicle chosen to carry on a business should be kept under periodic review. If the original choice of vehicle to carry on a business becomes unsuitable, an alternative vehicle may take over that business, although a change of vehicle may be costly, depending on the circumstances.This fundamentals note considers the different...

Companies limited by guarantee

What is a company limited by guarantee?Limited companies can be either limited by shares or by guarantee. A company limited by guarantee is a type of company whose members have undertaken to contribute to the assets of the company in the event of it being wound up. It is not possible for a company limited by guarantee to be a public company.Most companies limited by guarantee do not have shares because since 22 December 1980 (1 July 1983 in Northern Ireland), it has not been possible to form a company limited by guarantee with a share capital. Companies limited by guarantee with a share capital can be public or private companies. They are relatively rare and historical, so are not covered in the main part of this Practice Note, but further details on companies limited by guarantee with a share capital are provided below in the following section: Companies limited by guarantee with a share capital .Companies limited by guarantee and without a share capital have members who, Instead of...

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Articles of association—tenants’ management company limited by guarantee

ARTICLES OF ASSOCIATION OF [NAME] MANAGEMENT COMPANY LIMITED A precedent form of articles of association for a management company limited by guarantee with drafting

Model articles—private company limited by guarantee—pre April 2013 [Archived]

Model articles—private company limited by guarantee—pre April 2013 [Archived] ARCHIVED: This archived Precedent sets out the statutory form of model articles for private companies limited by guarantee incorporated under the Companies Act 2006 and 27 April 2013. An amended version of the model articles applies to companies incorporated on or after 28 April 2013. This Precedent contains public sector information licensed under the Open Government Licence version 1.0. It is not maintained but is included for historical reference as this version of the model articles may still apply to some companies incorporated prior to 28 April 2013. Index to the articles Part 1 Interpretation and limitation of liability 1 Defined terms 2 Liability of members Part 2 Directors Directors' powers and responsibilities 3 Directors' general authority 4 Members' reserve power 5 Directors may delegate 6 Committees Decision-making by directors 7 Directors to take decisions collectively 8 Unanimous decisions 9 Calling a directors' meeting 10 Participation in directors' meetings 11 Quorum for directors' meetings 12 Chairing of directors' meetings...

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Can a company limited by guarantee pay dividends? If so, in what proportion should they be paid to members?

Can a company limited by guarantee pay dividends? If so, in what proportion should they be paid to members? For the purposes of this Q&A, we have assumed that the company is a company limited by guarantee without a share capital (although a company limited by guarantee and with a share capital may exist, it has not been possible to form such a company or re-register as such a company since 22 December 1980 in Great Britain and since 1 July 1983 in Northern Ireland, see section 5 of the Companies Act 2006 (CA 2006)). We have further assumed that the company is not a charity and not regulated by any regulatory body. The ordinary meaning of 'dividend' is a share of profits, whether at a fixed rate or otherwise, allocated to the holders of shares in a company (see Henry v Great Northern Rly Co). Therefore, a company limited by guarantee without a share capital is unable to pay dividends in that sense. However,...

Can a corporate charity (limited by guarantee), that is not insolvent, wind itself up? Are there any restrictions on how it should distribute the balance standing in its bank account? What is the process for distributing surplus assets?

Can a corporate charity (limited by guarantee), that is not insolvent, wind itself up? Are there any restrictions on how it should distribute the balance standing in its bank account? What is the process for distributing surplus assets? This Q&A covers solvent charities with no insolvency issues. A corporate charity (limited by guarantee) has the same legal structure of a company limited by guarantee. A company limited by guarantee is treated in the same way as a company limited by shares when it comes to available insolvency procedures. Therefore a corporate charity (limited by guarantee) that is not insolvent can wind itself up. There are several procedures available to wind up an insolvent charity, as can be seen in Practice Note: Charity insolvency—a guide to available insolvency procedures. In order to wind-up a solvent charity, the members’ voluntary liquidation (MVL) process is required. For the procedure on bringing the charity to an end through the resolution of its members, please see the Practice Note: Members' voluntary...

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Private Client weekly highlights—19 May 2022

This week’s edition of Private Client highlights includes: (1) The Financial Conduct Authority’s consultation paper CP22/9 on the expansion of the Dormant Assets Scheme; (2) Beard v HMRC, a decision of the First Tier Tax Tribunal which held that distributions paid by a Jersey company out of share premium were dividends of an income nature for UK tax purposes; (3) Analysis of Middleton v Middleton Enterprises (Holdings) Ltd, in which the court held that a series of interest-free loan agreements between a company’s shareholders and the company could be set aside for mistake under the equitable principles applicable to voluntary dispositions as set out in Pitt v Holt; (4) Analysis of Re Cooper deceased (probate) (Cooper (a child) v Chapman, in which the High Court admitted a missing Will to probate; (5) A Taxpayer v HMRC, the first case to consider the exceptional circumstances exemption in the statutory residence test, and (6) In the matter of the estate of Sheikh Saoud Mohamed A A Al Thani (deceased), a decision of...

Court can direct charitable company members on exercise of powers (Lehtimäki v Cooper)

Private Client analysis: Elizabeth Jones, a partner at Farrer & Co specialising in charity law, examines the Supreme Court’s decision that members of a charitable company are fiduciaries whom the court can direct how to exercise their discretion.

View the latest UK Parliament Acts documents on Company limited by guarantee

3 Limited and unlimited companies

(1)     A company is a “limited company” if the liability of its members is limited by its constitution.It may be limited by shares or limited by guarantee.(2)     If their liability is limited to the amount, if any, unpaid on the shares held by them, the company is “limited by shares”.(3)     If their liability is limited to such amount as the members undertake to contribute to the assets of the company in the event of its being wound up, the company is “limited by guarantee”.(4)     If there is no limit on the liability