Introduction to Business and Company Law Flashcards

A guarantee in the context of a company limited by guarantee means:

Answer: Each member guarantees to contribute a specified amount (usually £1) towards the company's debts if it is wound up

In a company limited by guarantee (common for charities and not-for-profit organisations), members guarantee to pay a specified amount (typically £1) if the company is wound up. There is no share capital. Members' liability is limited to their guarantee amount.

Statutory redundancy pay in the UK is calculated based on:

Answer: The employee's age, length of service, and weekly pay (subject to a statutory cap)

Statutory redundancy pay is calculated using the employee's age, length of continuous service (up to 20 years), and weekly pay (subject to a statutory cap updated annually). The rate varies: 0.5 week's pay per year under 22, 1 week for 22-40, 1.5 weeks for 41+.

A floating charge in company law:

Answer: Is a charge over a class of assets that the company can deal with in the ordinary course of business until the charge crystallises

A floating charge hovers over a category of assets (such as stock or trade receivables) rather than specific individual assets. The company can buy and sell these assets in the ordinary course of business. The charge 'crystallises' (becomes fixed) on certain events such as insolvency.

The National Minimum Wage in the UK is set by:

Answer: The Low Pay Commission advises the government, which sets the rates

The Low Pay Commission (an independent body) recommends minimum wage rates to the government. The government then sets the legally binding rates, which vary by age group. The National Living Wage (the highest rate) applies to workers aged 21 and over.

Fraudulent trading occurs when:

Answer: A company carries on business with intent to defraud creditors or for any fraudulent purpose

Fraudulent trading (Insolvency Act 1986, s.213) occurs when business is carried on with intent to defraud creditors or for any other fraudulent purpose. Those responsible can be personally liable for the company's debts and may face criminal prosecution.

Under the Companies Act 2006, every company must have:

Answer: At least one director who is a natural person (a real individual, not another company)

The Companies Act 2006 requires every company to have at least one director who is a natural person (an individual aged 16 or over). Private companies no longer need a company secretary (though they can appoint one), while PLCs must have a qualified company secretary.