CHAPTER/LECTURE SGS 3. Introduction to Companies

Introduction to fundamental and pervasive principles of company law including:

 separate personality;

 ownership/management of companies;

 duties of directors;

 constitutional documentation;

 voting.

Introduction to differences between private, public and listed companies;

introduction to listed companies;

introduction to raising capital and the concept of liquidity;

listed company shareholders; and overview of the legal and regulatory framework with which listed companies have to comply.

1. Setting up in Business

Different types of business media and their advantages/disadvantages;

the process by which law firms engage new clients;

the key elements of a business plan; and introduction to differences between private and public limited companies.

2. Introduction to Ritchisons Supermarkets

Structure of the Ritchisons groups of companies;

strategic options for the client to develop the business;

developing the required legal advice to implement the client’s plans;

introduction to basic group structures; and basic company procedure.

Basics of income tax (savings vs non-savings income, charges on income, personal allowance, grossing-up);

and

basics of CGT (disposal price, incidental costs, base cost, Entrepreneurs’ Relief, annual exemption, calculation of CGT payable).

4. Incorporating a Company

Formation of a private limited company;

comparison of incorporation with conversion of shelf companies;

consideration of Companies Act 2006 requirements on conversion of shelf companies including change of name, change of registered office and change of accounting reference date;

pre and post-incorporation contracts;

directors as agents; and

consideration of the power of directors to bind the company.

5. Company Procedure

Incorporating a company using an online service;

preparation of a company procedure plan to effect the appointment and resignation of directors, secretary and auditors, transfer of subscriber shares, and other changes;

understanding the documentation needed to convert a shelf company;

identifying the relevant statutory authority that governs company procedure; and analysing how short notice and written resolutions are used in company procedure.

The use of shareholders’ agreements in the context of a limited liability company;

the relationship between shareholders’

agreements and the articles of association;

typical provisions in shareholders’

agreements, including anti-dilution provisions and restrictive covenants;

consideration of the different types of vehicles used for conducting business;

and

additional considerations on transactions involving shareholders’ agreements:

including competition, employment and intellectual property law.

6. The Company’s Constitution

Analysing relevant precedent and Model Articles and CA provisions to assess the legality of articles;

consideration of the commercial suitability of precedent articles for a client company;

consideration of directors’ conflicts of interest; and

company procedure on changing articles of association on full notice and using the written resolution procedure.

Introduction to the anatomy of a typical commercial agreement and principles and conventions of effective drafting.

5. Financing a Company 1 - Equity Finance (Issue and Allotment of Shares)

Considering how and why a company raises finance and looking at some of the terminology involved;

share capital structure of a company including showing share capital on a company’s balance sheet;

legal and commercial considerations on the allotment and issue of shares (including FSMA and LPDT Rules requirements);

detailed consideration of the procedure for allotting and issuing shares;

additional issues for public and listed companies on issuing shares;

use of different types of share capital and class rights;

basic financial statements of a company, namely the Profit and Loss Account and Balance Sheet; and

common financial ratios that demonstrate how effectively a company is utilising its finance, including Return On Capital Employed, Earnings Per Share and the Gearing Ratio.

Shares)

Legal and commercial considerations on the allotment and issue of shares

including detailed consideration of CA and Model Articles provisions on allotment;

preference shares and rights contained in articles;

effect of equity finance on the profit and loss account and the balance sheet; and different types of share capital and class rights.

6. Financing a Company 2 – Debt Finance

Forms of debt finance including the main documentation used;

debt v. equity (commercial and balance sheet considerations);

gearing/leverage, including how to calculate a gearing ratio and the effect of gearing on the return to shareholders;

types of security (fixed and floating charges, pledges, mortgages, liens);

guarantees;

order of priority between creditors;

registration, perfection and priority of security; and

financial services and business accounts implications.

Procedural steps on issuing debt;

commercial considerations on debt financing;

commercial and legal considerations on debt in group structures (excluding, for now, structural subordination);

selection of appropriate security interest by reference to balance sheet assets:

mortgages, fixed and floating charges;

registration of security (s.859A CA);

analysis of the key provisions of a short-form security document and a loan agreement; and

effect of debt finance on the profit and loss account and the balance sheet.

10. Business Accounts

Consolidation of key business accounts concepts including:

Prepayments;

Accruals;

Bad and doubtful debts; and

Explaining the effect on the Profit and Loss account and Balance Sheet of different transactions.

Developing your drafting skills by drafting a commercial agreement using a

precedent to reflect client instructions.

ZONE 2 - Directors 7. The Roles, Responsibilities and

Requirements of Directors Disclosure of directors’ interests;

analysis and application of the law on loans, quasi-loans, credit transactions and substantial property transactions with directors and the definitions of connected persons and associated companies; and review of CA 2006 in relation to directors’

service contracts.