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GLOSSARY 

The following definitions are for information only and are not intended to be legal definitions 

Abbreviated Accounts

A condensed version of the annual accounts which small and medium sized companies are allowed to file with the registrar of companies. Full accounts must be circulated to members.

Allotment

Issue of shares

Allottee

A person or organisation to whom shares have been issued.

Alternate director

A person appointed by a director to represent them, usually at board meetings, and who assumes the duties and responsibilities of that director when acting as an alternate.

Annual accounts

Accounts prepared to fulfil the directors duty to present accounts to members in respect of each financial year. Annual accounts of limited companies must be filed with the registrar of companies.

Annual general meeting (AGM)

A meeting of the members of the company which must be held each calendar year and within 15 months of the previous AGM. Special rules apply for the first AGM of a company.

Annual return

A form (363s) required to be filed each year with the registrar of companies containing specified information about the company’s directors, secretary, registered office and members.

Articles of association

Constitutional document setting out the internal regulations of the company. Unless modified or excluded, the specimen articles in Table A have effect.

Audit

The independent examination of the company’s accounts by an individual or firm registered as auditors.

Authorised share capital

See share capital

Bonus issue

The issue of additional fully paid shares to existing shareholders, in proportion to their current holding

Capital

The money or money’s worth used by the company to finance its operation

Certificate of incorporation

A certificate issued by the registrar of companies on receipt of the constitutional and other documents required to form a company. A company obtains its legal identity from the date of incorporation shown on the certificate.

Charge

A means by which a company offers its assets as security of a debt. The charge may be ‘fixed’ over a specific asset or assets or ‘floating’ over all the assets of the company.

Class rights

Where a company has more than one class of share the rights attaching to those different classes of shares.

Common seal

A seal bearing the company’s name for affixing to legal documents, which are required to be sealed, such as share certificates and deeds.

Company

An association of persons which, on the incorporation, become a legal entity separate from the individuals comprising its membership.

Company secretary

An officer of the company with statutory duties and usually charged by the directors of a company with responsibility for a range of duties relating to the company’s statutory books and records, companies house filing etc. Every company should either have a company secretary or designate one of its directors to assume the responsibilities normally assumed by a company secretary. The company secretary of a plc is required to be qualified either under the Institute of Chartered Secretaries and Administrators or other professional body specified by company law.

Contract

An agreement between two or more persons or organisations creating a legally enforceable obligation between them.

Corporate governance 'The system by which a companies are directed and controlled '-Cadbury Report 1992. There has been much pressure on companies, particularly plcs and not for profit organisations, to improve their corporate governance in recent years, which because of the complex nature of the task has largely fallen to the responsibility of Company Secretaries.

Creditor

A person or organisation owed money

Debenture

A written acknowledgement of a debt owed by a company. Usually the debenture is created by a trust deed by which the company property is mortgaged to trustees on behalf of the debenture holders, as security for the payment of interest and capital

Debtor

Person or organisation that owes money

Debt

An amount of money owed by a debtor to a creditor

Director

An officer of a company, who either solely or with others acting as a board, has responsibility for the management of a company.

Directors report

A statement attached to the annual accounts of a company containing certain information laid down in law.

Distributable reserves

Profit retained by a company which can be distributed to members

Dividends

A distribution to the members of a company, usually of cash.

Dormant company

A company which has not traded or has ceased trading but which remains on the register of companies and therefore is still required to meet its statutory obligations of filing accounts and an annual return etc.

Elective resolution or Elective regime

 The passing of a resolution which allows a company to dispense with the holding of Annual General Meetings at which the annual accounts are presented and auditors, if any, are re-appointed.

Extraordinary general meeting

Any general meeting of the members of a company which is not an AGM

Extraordinary resolution

A resolution requiring a 75% majority at general meeting

Fiduciary

Having a position of trust, such that the power and authority conferred by the position must be exercised solely in the interest of the person with whom the fiduciary relationship exists. Directors have a fiduciary duty to their company, obliging them to act always in good faith and make decision on behalf of the company in pursuance of the company’s stated objects of association.

Fixed charge

Security, usually for a loan, over a specific asset such as property or equipment

Floating charge

Security, usually for a loan, over a class of assets the individual elements of which may vary over time such as stock or book debts

Formation

The process of incorporating a company

General meeting

A meeting of the members of a company

Guarantee

An agreement under which a guarantor undertakes to meet the contractual obligations of a person or organisation in the event of default. A company limited by guarantee is one in which the liability of the members is limited to a specified amount in a winding up. Often not for profit organisations are formed as companies limited by guarantee.

Incorporation

Process by which companies are formed

Institute of Chartered Secretaries and Administrators (ICSA)

The professional body of Company Secretaries. Setting out its own stringent qualification requirements and standards of professional conduct.

Issued capital

The amount of capital (or shares) issued to members

Limited company

A company in which the liability of its members is limited either to the amount of their share capital (a company limited by shares) or to a specific amount guaranteed in the event of a winding up

Limited liability partnership (LLP)

A corporate body where the members have limited liability but undertake the management themselves rather than appointing directors to manage the company on their behalf. Often favoured by accountancy and solicitor groups

Listed company

A company whose shares are listed for trading on the London Stock Exchange

Memorandum of association

A constitutional document setting out the company’s name, domicile, objects and authorised share capital

Nominal capital

Represent the nominal value of any shares issued excluding any share premium.

Objects

The purpose for which a company is formed as set out in the objects clause of a company’s memorandum of association

Officer

Usually regarded as directors or the company secretary of a company but can include senior managers with sufficient seniority.

Ordinary resolution

A resolution passed at a general meeting by a simple majority of votes

Ordinary shares

The most common type of share of a company. Gives the holder the right to share in the company’s profits and the right to vote at general meetings

Partnership

A business run by two or more individuals where the owners of the business share unlimited liability for any business debt

Paid up capital

Refers to shares in which the whole amount payable on each share has been paid

Pre-emption rights

The preferential right given to members to acquire new shares being offered for sale by an existing member.

Private company

A company that is not a PLC

Proxy

A person authorised by a member to vote on his behalf at a general meeting

Public limited company (PLC)

A company, which has met the minimum requirements as to share capital and has registered as a public limited company. Only public limited companies can offer shares to the public

Registrar of companies

Official responsible for maintaining the records filed at Companies House under the requirements of the Companies Acts

Resolution

A decision made by a meeting either of directors or members.

Retirement by rotation

The annual standing down of directors at an Annual General Meeting.

Risk management

The consideration of all aspects of asset protection (including employees) through the identification and reduction of risk and the adoption of adequate insurance.

Shadow director

A person not officially appointed a director but who’s opinions are influential in the company’s decision making process. Shadow director assume the responsibility of directors under company law even though they have not been formally appointed as a director of the company

Share

A unit of ownership of a company.

Share capital

The Capital of a company contributed by its members

Share premium

The excess of the issue price of a share above the nominal value of that share

Sole trader

 An individual who chooses to begin trading alone. The liability for debts of a sole trader is unlimited.

Special resolution

A resolution requiring 21 days notice to be given to members, carried by at least 75% of the members present and voting

Statutory books

A term generally used to describe the minute books and registers etc that all companies are required to maintain

Stock transfer forms

Document required to transfer shares. The transfer of shares may be subject to stamp duty.

Subscriber

A person who agrees to take up the shares in a company on incorporation.

Table A

Specimen Articles of Association for a company limited by shares. Unless specifically modified or excluded the version of Table A in force at the time of a company’s incorporation automatically applies to a company.

Transfer

Process under which shares are transferred.

Transferee

A person or company acquiring shares by way of transfer.

Transferor

A person or company disposing of shares by way of transfer.

Unlimited company

A company in which the members have unlimited liability in the event that the company is wound-up

Ultra vires

A term used when a company or its directors have acted outside their authority

Working capital

The capital required by a company on a day-to-day basis to meet it’s operating costs.

Written resolution

Allows private companies to pass a resolution without a meeting. The resolution in writing must be signed by all entitled to attend.

 

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Copyright © 2005 Red Tape Company Services Limited
Last modified: 11/16/05