2.5 Companies: Equity Finance Flashcards
Two sections which shows if SR/OR has to be filed at CH
29 + 30
Example of offer being exempt from prospectus under s.85 FSMA
Offer directed at fewer than 150
What must ‘85 company pass to rely on 550
OR
What does it mean if preferential shares are cumulative
If no dividend declared, right is carried forward to the next year
Who can apply to court to cancel variation of class rights + provision
M w/ 15% of relevant shares who did not agree (633(2))
How are equity securities defined in 560
Ordinary shares, or rights to convert into OS
Where are equity securities defined
560
771(1) requires what
If Ds refuse transfer, must give reasons
When might prior authority to allot no longer be good
If 5 years have passed, or authority cap reached
Two provisions on updating M reg (generally)
112 + 113
How does PrivC w/ one share class disapply pre-emption
SR/AoA
Under what section can PrivC w/ one share class, issuing for same class, disapply pre-emption
569(1)
What is the effect of a stock transfer form on M’s title
M gets equitable title
580
Shares can only be issued at a premium
How does D get authority to allot + provision
By OR (551(1))
Are participating preference shares still OSs under 561?
Yes
If Ds refuse to transfer shares under MA 26(5), what must they do
Give reasons per 771(2)
What section says cannot allot if no authority
549(1)
561 + 573 apply to what kind of shares, despite them being a transfer
Treasury
558 defines what
Allotment
542?
Shares must have fixed NV or void
Two normal ways transfer of shares restricted
Ds power to refuse + pre-emption
Provision on shares must have fixed NV or void
542
Two ways class rights are altered + provision
AoA, or if AoA silent, by SR (630)
If pre-emption rights disapplied, what are PMM
File SR with 15 days after passed
What is issuing
Once reg + title complete
What does the mnemonic for procedure to allot and issue stand for
Cap, Authority, Disapply, New class, BR
What are treasury shares
Shares bought back by the compant
How does Ms title become complete
By registering on M reg (112(2))
When are shares transmitted
If M dies or goes bankrupt
Are the conditions for NOT being an ‘ordinary share’ under 560 (capped right to dividend and capital payments) cumulative? I.e. do you have to satisfy both for the shares not to be ‘OS’
Yes
What is an exception to needing to get authority + provision
PrivC w/ one class of shares allotting for the same class (550)
What provision says shares can only be issued at a premium, never at a discount
580
If new class of rights created, what are PMM
File SR + amended AoA within 15 days
630?
Alter class rights of shares by SR
Which LSE market is not a UK market for s.85 FSMA
AIM
Which kind of class of share is not presumed to be cumulative unless in AoA
Participating preference
What are called up shares
Balance on NV of shares demanded (when not fully paid)
The rights of pre-emption under 561 only apply to what
Equity securities paid for in cash
How is a preferential dividend usually expressed
% of NV, or based on subscription price
Definition of offering shares to UK public under s.85 FSMA is wide or narrow?
Wider, beyond 755
How many tests complied w/ in s.85 FSMA = prospectus needed
just 1/2
How is any cap on allotting shares removed for non ‘85 companies + provision
By SR (21(1))
What two sections apply to treasury shares, despite it being a transfer
561 + 573
MA 26(5)
Ds have power to refuse transfer of shares
If authority arises to allot under 550, what are PMM
CA ‘85 files OR w/ CH within 15 days
Time to send share certificates to new Ms + provision
2 months, 769(1)
If authority granted to allot under 551, what are PMM
File OR within 15 days
If shares allotted, what are PMM
Form SH01, statement of capital, M reg updated, share certificates sent, and consider if PSC position changed
Is pre-emption included in MA for transfer of shares?
No
Common feature of ordinary shares
1 vote/share, right to dividend and surplus on wind up
What are convertible shares
Option to convert into different class
What section excludes 561 for securities paid for otherwise than in cash
565
What must be in a prospectus
Sufficient info for informed assessment
If issuing new share class, what must happen
Amend AoA to deal w/ new rights
Common features of participating preference shares
Participate w/ Ms in surplus dividends (after fixed dividend), and surplus assets
What are redeemable shares
Company intends to buy back/cancel in future
Must CA ‘06 file anything to do with authority to allot under 550? Why
No - no need to pass OR to use 550
Mnemonic for procedure to allot + issue
Cats And Dogs Nibble Bones
What are the tests for when s.85 FSMA applies?
Offering shares to UK public or shares admitted to trading on UK market
How are shares actually allotted
By BR, after any required GM
560 defines what
Equity securities
If it is a specific allotment which allows them to display 561 under 571, what must Ds do
Give written consent + reasons + amount to be paid w/ justification
Four possible company record PMM for allotting shares
Board + GM minutes, sending share certificates, updating M reg, and updating PSC reg
Common features of preference shares
Priority on payment of dividend/surplus, and presumed to be cumulative
Form to file w/ CH if shares allotted
SH01
For what companies was there a cap on allotting shares
Companies under ‘85
Why are participating preference shares OSs under 561
Right to participate in dividend WITHOUT a fixed amount - varies year to year
Provision on updating PSC reg if new PSC
790M
Can authority to allot be revoked, even if given in AoA? provision
Yes - 551(8)
When is a prospectus not required, despite s.85 complied w//?
Offer exempt, or securities exempt
What are paid up shares
Full price paid
What two kinds of offers are not offers to the public for 755
Private concern (e.g. to family members), or direct offers to individuals
Two considerations on allotment
Offer to the public + prospectus
If cap has been removed, what are the two PMM
File new AoA, and file SR/OR (depending on if CA ‘85 or ‘06)
Where are the rights of pre-emption for allotting equity securities
561
What restriction on transfer of shares is in MA
Ds power to refuse under MA 26(5)
Is a cap on allotting shares still required
No
What kind of company cannot use 550 w/o OR first
‘85 company
Common features of deferred shares
No voting rights nor dividend, sometimes surplus profits after dividend, but usually no rights at all
Provision on filing statement of capital if shares allotted
555(3)
How is 561 generally disapplied (provision too)
By SR/AoA per 570(1)
What is allotment
Person unconditionally entitled to be registered as M
What kind of C and per what provision cannot offer to the public
Priv, 755
What happened to the cap on allotting shares for companies under ‘85 when ‘06 came in (+ provision)
Deemed to be included in AoA (28(a))
Which kind of shares usually has no rights at all
Deferred shares
How is cap on allotting shares removed for ‘85 companies
By OR
Time to update M reg when shares allotted + provision
2 months (554(1))
How are ordinary shares defined in 560
Those OTHER THAN shares w/ capped right to dividends AND capital payments
Time to file SH01 w/ CH + provision
One month - 555(2)
Where is specific allotment, which diapplies 561?
571
Where are the tests for if prospectus needed and approved by FCA before shares can be allotted
s.85 FSMA
s.85 FSMA has how many tests and for what
Two tests for if prospectus required to allot shares
What two sections must not have been triggered if there is a new share class
550 + 569
565
561 does not apply to securities paid for otherwise than in cash
Why do rights of pre-emption exist
As allotment = diluting existing shares
What two things are required to transfer shares
Stock transfer form + stamp duty
When does M get legal title from transfer of shares
Once registered
What is transferring
C between S + purchaser, and company is NOT a party
What is the disapplication of pre-emption under 570 attached to?
General authority under 551
Provision on telling CH of new PSC + time
790VA, within 14 days of change
What to check for ‘cap’ in allotting shares’
Is there a cap, has it been removed/changed, and have shares been issued up to the cap
What are the restrictions on transfer of shares
Subject to AoA
551(1) gives what
General authority by OR for Ds to allot§
