Cap 1 Law - Formation of Companies

In some cases, the court lifts the ‘corporate veil’, for example, to ignore the

incorporated nature of a business altogether in those cases where it appears

to be nothing but a sham. Are the courts likely to lift the corporate veil in the

following situations?

Where a company is registered in Ireland but all its members, except one, are

nationals and reside in New Zealand. The company was registered in Ireland

as a film production company and has applied to the Irish Government for a

grant, which is only given to Irish companies. The company has five members

with equal shareholdings.

A. Yes

B. No

Where the creditors of an insolvent subsidiary company are unlikely to receive

settlement of their debts as all the assets of the subsidiary were transferred to

the holding company in the six months prior to its liquidation?

C. Yes

D. No

A Yes. In such circumstances, the veil will be lifted in order to identify the

company as a New Zealand company.

C Yes. As the scenario indicates fraudulent activity.

Dawn and Patrick are planning to set up a public company selling electrical

goods at discounted rates. They ask for your advice on the following matters.

Can the company commence trading once it is incorporated, provided they

obtain a trading certificate within the first 12 months following incorporation?

A. Yes

B. No

Can it be an unlimited company?

C. Yes

D. No

B No. The company should not commence trading until a trading certificate

has been obtained – this breach is a Category 3 offence.

C Yes. A public company may be an unlimited company, with or without a share

capital.

A designated activity company’s application for registration must include a

statement containing three pieces of information. Which one of the following

pieces of information is NOT required as part of this application?

A. Details of the objectives of the company

B. The name and registered office of the company

C. Particulars of the directors, including their signatures

D. A statement of the company’s issued capital

A A statement of objectives is included in the Memorandum of Association.

Under the Companies Act 2014, essential requirements for registration as a

designated activity company by the Registrar of Companies include the

submission of:

An application for a trading certificate

A. Yes

B. No

The Memorandum of Association

C. Yes

D. No

B No. A trading certificate is only required for a public company, not a DAC.

C Yes. A Memorandum of Association needs to be submitted upon application

for incorporation of a company.

Kim and Sophie plan to set up a private company limited by shares for their

existing florist business. They ask your advice on two matters:

Do they need to obtain a trading certificate before they commence trading under

the company's registered name?

A. Yes

B. No

Will the company be required to hold an annual general meeting (AGM) within

the first 18 months following incorporation?

C. Yes

D. No

B No. Only a public company needs a trading certificate.

D No. An LTD is not required to hold AGMs.

A public company should obtain a trading certificate before it can commence

trading. In this regard, which of the following is incorrect?

A. Trading in contravention of this requirement may render any company

officer responsible for the default liable to a fine

B. The application for a trading certificate should state the nominal value of the

company's allotted share capital

C. Failure to obtain a trading certificate within six months of incorporation may

result in a compulsory winding up

D. If the company enters into a transaction in contravention of this requirement,

the transaction is not invalid as a result

C The relevant period is 12 months from incorporation.

Lorna sets up a new company, Aqua Art Ltd, to continue her existing business.

At the same time as preparing the necessary documentation for incorporation,

Lorna exchanged contracts with Land Management Ltd for the purchase of a

small industrial unit for the business. She receives the certificate of

incorporation for Aqua Art Ltd a day before completion is due on the purchase

of the industrial unit. Land Management Ltd fails to complete the sale because

it has received a better offer.

Can Aqua Art Ltd ratify the contract?

A. Yes

B. No

Can Lorna enforce the contract against Land Management Ltd without the

approval of the members of Aqua Art Ltd?

C. Yes

D. No

A Yes, this is a pre-incorporation contract, which may be ratified by the

company following incorporation.

C Yes. The contract is between Lorna and Land Management Ltd.

Isaac and Jack are considering incorporating their dry-cleaning business but

have been a bit deterred by the administrative burden that appears to apply to

companies. They ask for your advice on two points:

As a small company, will they need to prepare a directors' report and auditors’

report every year?

A. Yes

B. No

Does the company have to file an annual return every year?

C. Yes

D. No

B No. They will need to file a directors' report but an auditor’s report is only

required if the company is not audit exempt.

C Yes.

John and Margaret are intending to set up a designated activity company.

Which one of the following documents can they choose NOT to submit to the

Companies Registration Office in order to register the company and instead

adopt the optional provisions of the Companies Act 2014?

A. Statement of company officers

B. Statement of issued capital

C. Memorandum of Association

D. Articles of Association

D The provisions of the Companies Act 2014 can be adopted as the internal

rules and regulations of the company, rather than drafting their own Articles

of Association.

Which of the following are typically included in a company's Articles of

Association?

(1) The names and addresses of all shareholders

(2) The rules around how director and shareholder meetings should be held

(3) The rights attaching to any shares

(4) The names and addresses of all directors

A. (2) and (3) only

B. (1) and (4) only

C. (2), (3) and (4)

D. All of the above

A

The Memorandum of a public limited company (PLC) typically contains:

(1) The rights attaching to any shares

(2) A statement that the subscribers agree to become members of the company

on formation

(3) A full list of the objects of the company

(4) Details of the company's authorised share capital

A. All of the above

B. (2), (3) and (4)

C. (1), (3) and (4)

D. (1), (2) and (4)

B

The Articles of Association of a public limited company (PLC) can be amended

by a board resolution passed by 75% of the directors in the company entitled

to vote.

A. True

B. False

Since the operation of the Companies Act 2014, a private company limited by

shares is no longer required to file both a Memorandum and Articles of

Association with the Companies Registration Office in order to effect the

registration of the company. Is this statement:

C. True

D. False

B A special resolution of the members of the company is required.

C A single document constitution replaces the Memorandum and Articles.

Which of the below statements is true? The Articles of Association of a

designated activity company:

A. Usually contain details of the registered office of the company

B. Is part of the company's constitution

C. Usually contain the names and addresses of all directors

D. Usually contain the names and addresses of shareholders

B

Which of the following are circumstances in which the court may lift the ‘veil of

incorporation’?

(1) Where the director is also a shareholder

(2) In a time of war to determine the true residency of the company

(3) If the company is a sham

(2) and (3) only.

The court will not lift the veil of incorporation simply because a director is

also a shareholder. In fact, this is often the case in smaller, family-owned

companies.

Which one of the following statements is incorrect?

A. A public limited company (PLC) cannot pass a majority written resolution

B. A private company limited by shares (LTD) cannot offer its securities to the

public

C. A private limited company does not need to hold an annual general meeting

D. Public and private limited companies must have at least two directors

D A private limited company must have at least one director, a public limited

company must have at least two directors.

Jennifer is applying to register a new company called New Ideas Ltd, which has

a share capital of €10 (10 shares at €1 nominal value).

As part of the application, does Jennifer need to submit a statement of proposed

company officers?

A. Yes

B. No

As part of the application, does Jennifer need to submit a statement of

guarantee?

C. Yes

D. No

A Yes. A statement of proposed company officers is required in the application.

D No. A statement of guarantee is only appropriate for a company limited by

guarantee. Instead, Jennifer should submit a statement of capital and initial

shareholdings.

Are the following statements true or false?

A certificate of incorporation is conclusive evidence that a company is

registered in accordance with the Companies Act 2014.

A. True

B. False

When a designated activity company applies for registration, a copy of its

proposed Articles of Association must be supplied to the Registrar of

Companies.

C. True

D. False

A True.

D False. In the event that none is provided, the optional provision prescribed

by the Companies Act 2014 will apply.

What is the minimum period of notice that must be given to shareholders in

order to convene a meeting to consider a proposed alteration to the Articles of

Association?

A. 28 days clear notice

B. 21 days clear notice

C. 14 days clear notice

D. 7 days clear notice

B Alteration requires a special resolution which necessitates 21 days’ clear

notice.

The Articles of Association of a company are not publicly available and must be

inspected at a company's registered office.

A. True

B. False

Regardless of what the Articles of Association include, upon alteration of the

Articles the directors of a company can adopt a new set of Articles of

Association, without first obtaining shareholder approval.

C. True

D. False

B False. Articles must be filed with the Companies Registration Office and are

publicly available.

D False. A special resolution of the shareholders must be passed.