Although every company is in existence as a legal person as from its date of incorporation, a
cannot do business or exercise any borrowing powers unless it has obtained the
certificate of entitlement to do business
also known as the
from theRegistrar. To obtain the trading certificate, the public company must deliver to the Registrar a statutorydeclaration in the prescribed Form signed by a director or secretary stating;(i)That the nominal value of the company’s allotted share capital is at least $50,000.
That each allotted share is paid up to at least
on the nominal value and the
wholeof any premium
.(iii)That the preliminary expenses of the company and who has paid or is to pay, them.
That any benefits given or intended to be given to
It is an offence for a public company to;(a)do business or exercise borrowing powers(b)to enter into transaction with any third party.If it does not have the Trading Certificate.Private company can commence trading immediately on incorporation.
Changes in a company’s status
A company may initially register as one type of company but it may wish to change to anothertype.E.g. a private company may wish to change to a public company because it has grown and wishesto offer its shares to the public.
Re-registration of private company as public company (Sc 43- 47) CA 85
A private company may re-register as a public company if:(i)A special resolution is passed for such re-registration.In such circumstances, the company’s memorandum of Association is altered so that it states thatthe company is a public company and other alterations are made to comply with the requirementsrelating to public company as required by CA 85. The special resolution requires a majority infavor of at least
of those present and
notice should be given voting.(ii)An application for the purpose in the prescribed form and signed by a director orsecretary of the company is delivered to the Registrar accompanied by;(a)Copy of the amended memorandum of Association and Articles of Association.(b)Copy of the company’s Balance Sheet made up to date not more than 7 monthsprior to the application together with the auditor’s report.(c)A Certificate from the company’s auditors that the Balance Sheet shows thecompany’s net assets to be not less than the aggregate of its called-up sharecapital undistributed reserves, and(d) A statutory declaration by a director or secretary that the re-registrationrequirements have been complied.
The procedure, to be found at CA 1985, s. 43, is as follows:1
The members pass a special resolution that the company should be re-registered as a plc.
They may also need to pass an ordinary resolution increasing the authorised share capital to atleast £50,000 if the company’s authorised share capital is less than that figure.
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