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Company Management Glossary

Accounting reference date

The annual anniversary upon which a limited company’s financial year ends.

Accounting reference period

The period which ends on the accounting reference date.

Administration order

The order of a court to appoint an administrator to manage a limited company in financial difficulties in an attempt to secure its survival or winding up.

Affidavit

A written statement of facts made on oath and signed in the presence of an authorised person (e.g. solicitor). Used as evidence.

Allotment

The appropriation of shares in the capital of the limited company to the applicants for those shares, by the board.

Annual General Meeting (AGM)

Annual General Meetings (AGMs) are no longer obligatory, but are still a good idea. Annual meetings of a limited company’s shareholders to lay the annual accounts and directors’ and auditors’ reports before the shareholders and deal with other matters. Private limited companies can dispense with the need for AGMs by passing resolutions.

Annual Return

A prescribed form which must be filed annually with Companies House by a limited company, detailing the limited company’s activities for the period up to the anniversary of the limited company’s incorporation.

Articles of Association (or ‘Articles’)

Articles of Association is the document containing the limited company’s regulations for its internal management.

Asset

Anything owned with monetary value. This includes both real and personal property.

Auditor

A person appointed to examine the accounts of a registered company and to report on them to company members.

Authorised capital

This was the nominal capital which the limited company was authorised to issue by its Memorandum of Association. The concept of authorised capital has been abolished by the Companies Act 2006.

Board

The directors of a limited company.

Board meeting

A meeting of the limited company directors.

Company minutes

Written limited company records of formal proceedings of shareholders’ and directors’ meetings.

Company resolution

Decision made by limited company directors or shareholders in accordance with requisite majorities set out in the Articles of Association. Limited company resolutions may be approved in meetings or by written resolution.

Company seal

A limited company may execute deeds by affixing its seal to them. There is no longer any requirement for a limited company to have a seal and it may execute deeds by either two directors or a director and the company secretary signing the relevant document.

Director

An officer of the limited company who manages company business and has a duty of care, skill and good faith.

Elective resolution

A company resolution which a private limited company was entitled to pass to reduce or remove certain administrative or formal requirements. It required the consent of all those shareholders entitled to vote. These no longer apply since the introduction of the Companies Act 2006.

Extraordinary General Meeting (EGM)

Extraordinary General Meetings (EGMs) are now simply called ‘general meetings’. They were any meeting of limited company members other than the Annual General Meeting (AGM).

Extraordinary resolution

Extraordinary resolutions no longer apply. Any company resolution that was ‘extraordinary’ is now regarded as a ‘special resolution’. A company resolution required to effect decisions in certain circumstances (e.g. a creditors’ winding up) and which requires a majority of not less than 75 per cent of the company members voting in person or by proxy at a general meeting.

General meeting

A meeting of limited company shareholders. It may be an Annual General Meeting (AGM) or general meeting where shareholders give their approval for transactions.

Incorporate

To form a limited company by following procedures prescribed by law. On incorporation the limited company becomes a separate legal entity distinct from its owners.

Insolvency

The inability of a company to meet its debts as they become due.

Issue shares

Shares which have been actually allotted by the limited company and in respect of which the allottees have been entered in the limited company’s register of members.

Member

A person whose name has been entered in the limited company’s register of members in respect of the shares they hold in the limited company.

Memorandum of Association

The Memorandum of Association is the limited company’s charter enabling the outsider to establish the extent of the limited company’s powers.

Model Articles

Regulations published by the government for the management of a limited company.

Nominal share capital

The amount of share capital that a limited company is allowed to issue. When the limited company is incorporated, this is stated in its Memorandum of Association. For example, "£100 divided into 100 shares of £1 each". The shares are then said to have a nominal, or "par", value of £1 each and, if the limited company wants to issue more than 100 of them, it must pass a company resolution to increase its capital.

Ordinary resolution

A decision reached by a simple majority (more than 50 per cent) of limited company members voting in person or by proxy.

Poll

Ascertaining the will of the shareholders at a general meeting of the limited company by counting shareholders’ votes according to the size of their shareholdings.

Public Limited Company (PLC)

A type of limited company incorporated by registration under the Companies Act which may offer its shares to the public (a private company cannot do this) and is subject to a number of additional requirements under the Companies Act.

Quorum

The number of shareholders or limited company directors necessary for a vote in a valid meeting.

Registered office

The postal address of the limited company notified to Companies House.

Remuneration

Payment for services.

Share certificate

Written and executed instrument showing who holds title to a particular share or series of shares.

Shareholder

A holder of one or more shares in the capital of a limited company.

Special resolution

A decision reached by not less than 75 per cent of limited company members voting in person or by proxy at a general meeting.

Statutory books

The records that a limited company must keep as required by law. Changes must in many cases be notified to Companies House. The records should be kept at the limited company’s registered office and be available to the public for inspection.

Subscriber

A person who signs the Memorandum of Association and is issued the first shares in a new limited company.

Table A

For limited companies incorporated before 1 October 2009 these were the Model Articles. These have been replaced by Model Articles (see above).

Winding up

Arranging the affairs of, and then dissolving, a company.

Written resolution

A company resolution passed by either the shareholders or the directors of the limited company by signing a written form of the company resolution rather than voting at a meeting of the limited company or at a meeting of the directors of the limited company.

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