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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. |
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Allotment |
Issue of shares |
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Allottee |
A person or organisation to whom
shares have been issued. |
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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. |
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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. |
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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. |
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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. |
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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. |
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Audit |
The independent examination of
the company’s accounts by an individual or firm registered as auditors. |
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Authorised share capital |
See share capital |
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Bonus issue |
The issue of additional fully
paid shares to existing shareholders, in proportion to their current
holding |
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Capital |
The money or money’s worth used
by the company to finance its operation |
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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. |
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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. |
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Class rights |
Where a company has more than
one class of share the rights attaching to those different classes of
shares. |
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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. |
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Company |
An association of persons which,
on the incorporation, become a legal entity separate from the
individuals comprising its membership. |
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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. |
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Contract |
An agreement between two or more
persons or organisations creating a legally enforceable obligation
between them. |
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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. |
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Creditor |
A person or organisation owed
money |
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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 |
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Debtor |
Person or organisation that owes
money |
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Debt |
An amount of money owed by a
debtor to a creditor |
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Director |
An officer of a company, who
either solely or with others acting as a board, has responsibility for
the management of a company. |
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Directors report |
A statement attached to the
annual accounts of a company containing certain information laid down in
law. |
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Distributable reserves |
Profit retained by a company
which can be distributed to members |
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Dividends |
A distribution to the members of
a company, usually of cash. |
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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. |
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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. |
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Extraordinary general meeting |
Any general meeting of the
members of a company which is not an AGM |
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Extraordinary resolution |
A resolution requiring a 75%
majority at general meeting |
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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. |
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Fixed charge |
Security, usually for a loan,
over a specific asset such as property or equipment |
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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 |
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Formation |
The process of incorporating a
company |
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General meeting |
A meeting of the members of a
company |
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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. |
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Incorporation |
Process by which companies are
formed |
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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. |
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Issued capital |
The amount of capital (or
shares) issued to members |
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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 |
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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 |
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Listed company |
A company whose shares are
listed for trading on the London Stock Exchange |
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Memorandum of association |
A constitutional document
setting out the company’s name, domicile, objects and authorised share
capital |
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Nominal capital |
Represent the nominal value of
any shares issued excluding any share premium. |
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Objects
|
The purpose for which a company
is formed as set out in the objects clause of a company’s memorandum of
association |
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Officer |
Usually regarded as directors or
the company secretary of a company but can include senior managers with
sufficient seniority. |
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Ordinary resolution |
A resolution passed at a general
meeting by a simple majority of votes |
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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 |
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Partnership |
A business run by two or more
individuals where the owners of the business share unlimited liability
for any business debt |
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Paid up capital |
Refers to shares in which the
whole amount payable on each share has been paid |
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Pre-emption rights |
The preferential right given to
members to acquire new shares being offered for sale by an existing
member. |
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Private company |
A company that is not a PLC |
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Proxy |
A person authorised by a member
to vote on his behalf at a general meeting |
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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 |
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Registrar of companies |
Official responsible for
maintaining the records filed at Companies House under the requirements
of the Companies Acts |
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Resolution |
A decision made by a meeting
either of directors or members. |
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Retirement by rotation |
The annual standing down of
directors at an Annual General Meeting. |
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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. |
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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 |
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Share |
A unit of ownership of a
company. |
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Share capital |
The Capital of a company
contributed by its members |
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Share premium |
The excess of the issue price of
a share above the nominal value of that share |
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Sole trader |
An individual who chooses
to begin trading alone. The liability for debts of a sole trader is
unlimited. |
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Special resolution |
A resolution requiring 21 days
notice to be given to members, carried by at least 75% of the members
present and voting |
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Statutory books |
A term generally used to
describe the minute books and registers etc that all companies are
required to maintain |
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Stock transfer forms |
Document required to transfer
shares. The transfer of shares may be subject to stamp duty. |
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Subscriber |
A person who agrees to take up
the shares in a company on incorporation. |
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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. |
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Transfer |
Process under which shares are
transferred. |
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Transferee |
A person or company acquiring
shares by way of transfer. |
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Transferor |
A person or company disposing of
shares by way of transfer. |
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Unlimited company |
A company in which the members
have unlimited liability in the event that the company is wound-up |
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Ultra vires |
A term used when a company or
its directors have acted outside their authority |
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Working capital |
The capital required by a
company on a day-to-day basis to meet it’s operating costs. |
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Written resolution |
Allows private companies to pass
a resolution without a meeting. The resolution in writing must be signed
by all entitled to attend. |
