Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

meh > 11 - Shares and share capital > Flashcards

11 - Shares and share capital Flashcards

1
Q

The court confirmed that a share is what type of personal property for the shareholder?

A

‘Thing in action’ - intangible asset other than land

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Loose definition for nominal value

A

Minimum value a share can be allotted for & how much a shareholder is required to contribute upon liquidation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Difference between allotted share capital and issued share capital

A

Shares may be allotted but unissued if the person’s name is not yet on the RoM
* An allottee has an unconditional right to be included in the RoM, but this may not be actually done immediately

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What must authority to allot state (2)

A
  • Maximum amount of shares to be allotted
  • Date of expiry, being not more than 5 years
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

How long to deliver SH01?

A

30 days

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Minimum share capital of public co’s

A

£50k, paid up at 25%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What must a public company obtain before conducting business?

A

A trading certificate (with form SH50)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

S. 561(1)

A

Pre-emption on allotment of equity securities (ordinary shares)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Where in CA 2006 -Pre-emption on allotment of equity securities (ordinary shares)

A

S. 561(1)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

7 instances of where pre-emption does not apply

A
  • Bonus shares
  • Non-cash consideration
  • Share schemes
  • Excluded by articles
  • Articles contain corresponding right which has been complied with
  • Directors empowered to ignore pre-emption rights as per articles or special resolution
  • Directors have authority to allot without pre-emption applying
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Two remedies for company is allottee fails to pay instalment or comply with call notice

A
  • Company has a lien over the partly-paid shares, and can sell shares after 14 days
  • Company can send allottee notice of intended forfeiture, and forfeit the shares after 14 days
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Which model articles contain remedial rights for company on failing to pay instalment or complying with call notice?

A

PLC model articles

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

3 limits on non-cash consideration (not allowed) - only apply to PLCs

A
  • Payment in work or services
  • If not within the next 5 years
  • If it has not been independently valued
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Significance of commission being offered for payment of shares

A

Effectively means allottee gets shares at a discount from nominal value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

2 necessary conditions for commission on payment of shares being allowed

A
  • Authorised by the company’s articles
  • Commission does not exceed 10% of price (or rate authorised by articles if lower)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Do share certificates provide conclusive evidence on shareholdings?

A

No, this is found in the RoM

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Two functions of a share certificate

A
  • Provides basic information about shares to which is relates
  • Provides evidence (though not conclusive) that the person holds the legal title to the shares
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What constitutes a variation of share rights?

A
  • Any amendment to or addition of a provision in the articles for the variation of a right
  • Abrogation (repealing or abolishing) of a class right
19
Q

According to courts, if share rights stay the same, but the right is rendered less valuable or even worthless, does the constitute a variation? - example

A

No
Reduction of nominal value of dividend preference shares (meaning less dividends will be granted)

20
Q

Two ways to vary class rights

A
  • Complying with provision in articles allowing this (not contained in model arts)
  • Obtaining consent of holders of that class (three quarters meeting or resolution), and consent of members as a whole (three quarters meeting or resolution)
21
Q

Threshold for shareholders objecting to variation of share rights

A

15% of issued shares of class
or
15% of class (if no share capital)

22
Q

Three cases where transmission of shares applies

A
  • Death of a shareholder
  • Shareholder is bankrupt
  • Shareholders becomes patient under Mental Health Act 1983
23
Q

What is a transmission of shares?

A

Acquiring shares by operation of law

24
Q

Key advantage and disadvantage of offering shares to the public

A
  • Can raise significant amounts of money
  • Subject to significant amount of regulation
25
Q

Two key questions for companies when offering shares to the public

A
  • What type of offer will the company make?
  • Will the company trade its shares on a stock exchange?
26
Q

What is an IPO?

A

Initial public offering - first time shares are offered to the public

27
Q

4 methods by which companies can offer shares to the public

A
  • Offering public a certain amount of shares
  • Investment bank subscribing for shares, and subsequently offering them to public
  • ‘Placing’ - investment bank places its shares with selected purchasers (usually institutional investors), rather than the public at large
  • Rights issue made to existing shareholders
28
Q

Two principal markets of the LSE

A
  • Main Market
  • AIM
29
Q

Two key differences between Main Market and AIM

A
  • Securities traded on AIM need not be listed, and are subject to less regulation
  • Co’s with shares on AIM must comply with AIM Rules for Companies, rather than Rules of the LSE
30
Q

How does company get its shares listed?

A

By applying to the FCA

31
Q

Two types of listing available to companies

A
  • Standard listing
  • Premium listing
32
Q

Two differences between companies with a standard and premium listing

A

Premium listing:
- Greater regulation
- UKCG Code applies

33
Q

5 criteria which must be met to meet eligibility criteria for standard listing (further requirements for premium listing)

A
  • Incorporated and operating in accordance with its constitution
  • Shares listed must comply with law, co. constitution and have stat and other necessary consents
  • Securities must be freely transferrable, fully paid and free from all liens and restrictions on right to transfer
  • Expected aggregate of securities must be £30m in case of shares and £200k in case of debt securities
  • FCA approved prospectus must be published
34
Q

Two Listing Principles must comply with to maintain listing

A
  • Take reasonable steps to establish and maintain adequate processes, systems and controls to enable compliance with obligations; and
  • Deal with FCA in open and co-operative manner
35
Q

What will companies with a premium listing also be required to comply with?

A

Six Premium Listing Principles

36
Q

Why, in certain cases, are companies required to prepare and publish an approved prospectus prior to offering shares to public? (2)

A
  • To provide information which allows for informed decisions and therefore protects investors
  • Increases confidence in securities, contributing to the proper functioning and development of markets
37
Q

When is a prospectus required?

A

When securities are offered to the public, with certain exceptions

38
Q

What must be included in prospectus (3)

A
  • Assets and liabilities, profits and losses, FP and prospects of issuer
  • Rights attaching to the securities
  • Reasons for issuance and impact on issuer
39
Q

In which two formats can prospectus be provided?

A

Single document, or three separate documents

40
Q

What are the three separate documents of a prospectus

A
  • Registration document (info on company)
  • Securities note (info on shares)
  • Summary (aiding investors considering whether to invest)
41
Q

What is underwriting?

A

Underwriter agrees to subscribe or purchase any shares that are not taken up by the public

42
Q

What is the advantage of underwriting?

A

Company knows all shares being offered will be subscribed for or purchased

43
Q

What is the downside of underwriting?

A

Service will not be provided for free, commission will be charged

meh (20 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions