07. Companies: finance.

Question 1

T/F: Preference shareholders can compel the payment of their prescribed dividend so long as the company has sufficient distributable reserves.

Answer 1

FALSE

Question 2

If a company’s articles provide that preference shareholders DO NOT have a preferential right to return of capital upon winding up …

Answer 2

then they are entitled to share in any surplus.

Question 3

If a company’s articles provide that preference shareholders also have a preferential right to return of capital upon winding up …

Answer 3

then they are not allowed to share in any surplus.

Question 4

Preference shareholders are only allowed to share in a capital surplus upon winding up …

Answer 4

if the company’s articles state that they are not entitled to preferential return of capital.

Question 5

T/F: The right of preference shares to receive a dividend is a class right.

Answer 5

TRUE

by virtue of the fact that it is not enjoyed by other shareholders.

Question 6

Following a variation of class rights, the holders of at least … of the shares of the class may petition the court to have the variation cancelled.

Answer 6

15%

Question 7

Following a variation of class rights, the holders of at least 15% of the shares of the class may …

Answer 7

petition the court to have the variation cancelled.

Question 8

Following a variation of class rights, the holders of at least 15% of the shares of the class may petition the court to have the variation cancelled but must do so within …

Answer 8

21 days.

Question 9

T/F: A variation of the class rights of one class of share which has a detrimental effect on those of another is deemed to be effectively a variation of both class rights.

Answer 9

FALSE

see Greenhalgh

Question 10

Called up share capital.

Answer 10

So much of the share capital as equals the aggregate amount of the calls made on [a company’s] shares, plus

share capital that is paid up without being called, and

share capital to be paid at a specified future date under the articles or terms of alllotment of the relevant shares.

Question 11

Called up share capital: ACM* + VSC + RSC

Answer 11

agreggate calls made

Question 12

Called up share capital: ACM + VSC* + RSC

Answer 12

volunteered share capital

Question 13

Called up share capital: ACM + VSC + RSC*

Answer 13

receivable share capital

Question 14

The directors of a public company are granted the authority to allot shares by …

Answer 14

ordinary resolution and/or the articles

Question 15

The directors of a private company are granted the authority to allot shares by …

Answer 15

ordinary resolution and/or the articles + statute (one class of share)

Question 16

The directors of a private company have the statutory right to allot shares provided that …

Answer 16

there is only one class of share and the articles do not prohibit it.

Question 17

T/F: The right of directors to issue shares in a private company with only one class of share cannot be removed.

Answer 17

FALSE

the company’s articles may prohbit such allottments.

Question 18

An allotment of shares must be registered within …

Answer 18

2 months.

Question 19

T/F: A bonus issue is the issue of additional shares, typcially fully paid up, to existing shareholders in proportion to their holdings.

Answer 19

TRUE

note ‘typically’ fully paid up

Question 20

A … issue is the issue of additional shares, typcially fully paid up, to existing shareholders in proportion to their holdings.

Answer 20

bonus

Question 21

T/F: By making a rights issue, a company requires existing shareholders to subscribe for additional shares in proportion to their holdings.

Answer 21

FALSE

there is no requirement to subscribe to a rights issue.

Question 22

T/F: Statutory rights of pre emption apply in the case of the allotment of equity securities for cash.

Answer 22

TRUE

although they can be excluded in a private company.

Question 23

T/F: Statutory rights of pre emption apply in the case of the allotment of equity securities for non cash consideration.

Answer 23

FALSE

there is a specific exemption within CA (2006).

Question 24

T/F: Statutory rights of pre emption apply in the case of the allotment of equity securities in respect of an employee share scheme.

Answer 24

FALSE

Question 25

T/F: Statutory rights of pre emption apply in the case of the allotment of bonus shares.

Answer 25

FALSE

Question 26

Bonus shares, non cash consideration and employees’ share schemes are examples of statutory exemptions of the right of …

Answer 26

pre emption.

Question 27

T/F: Shares may be allotted at a discount.

Answer 27

FALSE

Question 28

T/F: Shares may be allotted at a premium.

Answer 28

TRUE

Question 29

T/F: The orignial subscribers to a limited company’s memorandum of association must pay for their shares in cash.

Answer 29

FALSE

this only applies to public companies.

Question 30

T/F: Shares in any limited company must be at least one quarter paid up.

Answer 30

FALSE

this only applies to public companies.

Question 31

Shares in a … company must be at least one quarter paid up, together with the whole of any share premium.

Answer 31

public

Question 32

T/F: Shares in a public company can be purchased in return for an offer of work or services.

Answer 32

FALSE

Question 33

T/F: The CREST transfer system operates in respect of all shares in PLCs.

Answer 33

FALSE

it only operates in respect of quoted shares.

Question 34

T/F: Companies must make paperless transfers of shares, unless they have a reasonable excuse not to do so.

Answer 34

FALSE

while there is no obligation, there is an option in the CA 2006 for the Secretary of State to require it.

Question 35

Any subdivision or consolidation of shares must leave …

Answer 35

the proportions called and uncalled the same.