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BLP > 7. Returning Value to Ms > Flashcards

7. Returning Value to Ms Flashcards

1
Q

What must be checked about company shares if own purchase

A

RS or treasury will still be in issue after purchase

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2
Q

Where are the terms of redemption set out

A

In AoA or determined before allotment by BR

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3
Q

What must the state of share capital of company be for redemption of RS

A

Non RSs must also be in issue

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4
Q

Why do you need GM for own purchase + capital

A

Off-market C (OR) + approve capital (SR)

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5
Q

What must shares have been issued as for redemption

A

RS

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6
Q

Relevant specified investment for FSMA (Article)

A

Article 76

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7
Q

What must be checked before own purchase out of profits/fresh issue

A

AoA permits, shares fully paid and verify distributable profits

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8
Q

Report to CH on what for redemption of shares

A

Within 1 month of redemption w/ SoC

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9
Q

What kind of company can purchase own shares or redeem shares out of profits/fresh issue

A

Priv and Pub

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10
Q

Will two Part II RAO exclusions ever be applicable

A

No

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11
Q

Voting of owner of shares when own purchase + off-market C

A

Cannot carry res at GM and excluded in WR

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12
Q

Why do you need GM for redemption + capital

A

To pass SR to use capital

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13
Q

684 - 689 covers what

A

Redemption

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14
Q

Two sources to comply w/ for stage 4 of FSMA Q

A

327 FSMA and SRA Scope Rule 4

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15
Q

What usually happens after own purchase to the shares

A

Cancelled

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16
Q

What are two kinds of dividends

A

Final and interim

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17
Q

BM after GM approving off-market C does what

A

Enters into C + authorises signatory

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18
Q

Conclusion for FSMA Q

A

Firm must be authorised by FCA + comply w/ FCA Handbook

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19
Q

When can money paid to M for buy back be considered capital

A

If shares in unquoted trading C for at least 5 years + other hurdles

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20
Q

Who supervises Ss under FSMA

A

SRA

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21
Q

For how long must DS and AR be available for inspection for capital financing

A

5 weeks

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22
Q

When can buy back take place for capital financing

A

Between 5 and 7 weeks after SR

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23
Q

What part of CA enshrines doctrine of maintenance of share capital

A

658

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24
Q

Within/on 7 days of what docs does the GM have to be for redemption + capital

A

director’s solvency statement and auditors report

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25
Q

What are dividends based on as a general rule (in terms of splitting between Ms)

A

Based on NV of each share of Ms on reg at time of OR

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26
Q

What kind of shares can be kept as treasury shares - financing how?

A

From profits

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27
Q

When can Ms receive part of capital of company

A

If wound up, or if M sells shares

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28
Q

Why might a fresh issue be used to fund buy back

A

To maintain gearing, or if lending arrangements require share capital to stay the same

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29
Q

Why will PrivC always be off market

A

Bc not listed

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30
Q

What is the simplest buy back procedure

A

Profits/fresh issue for redemption

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31
Q

Two PMMs after GM for capital financing

A

Deliver 714 docs to CH by day of 719 notice + SR within 15 days

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32
Q

What is the effect of carrying out RA w/o authorisation or exemption

A

Criminal offence

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33
Q

When do unclaimed dividends reabsorb back into company

A

After 12 years

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34
Q

When does capital redemption reserve increase and by what on Balance Sheet

A

If own purchase + cancellation + by profits, increases by reduction in share capital

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35
Q

Article 53 RAO applies to what

A

Specified activity of advice on investment

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36
Q

What dividend only requires BR

A

Interim

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37
Q

What is necessary to be able to use De Minimis procedure

A

AoA authorises or SR will be needed

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38
Q

Report to CH on what for own purchase of shares

A

Return w/ SoC within 28 days of purchase

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39
Q

When is it not necessary to use profits first or fresh issue before capital for own purchase

A

De minimis procedure applies

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40
Q

What happens once shares are redeemed

A

they are cancelled

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41
Q

Can you ratify unlawful dividend? Explain

A

No bc illegal, so not permitted under 239

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42
Q

What reduces by purchase cost if own purchase + by profits

A

Distributable profits and net assets

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43
Q

Is interest payable on dividends?

A

No

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44
Q

Why is court order for reduction of capital also disadvantageous

A

Time-consuming and expensive

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45
Q

What must you check to use capital to redeem (x4)

A

AoA permits, profits used first, accounts less than 3 months old and accountants verify decision

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46
Q

What kind of company can purchase own shares or redeem shares out of capital

A

Only Priv

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47
Q

Stage 3 in FSMA Q

A

Part II RAO excludes some activities

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48
Q

Two ways for PrivC to reduce capital

A

SR + solvency statement, or SR + court order

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49
Q

By when must 714 docs be delivered to CH for capital financing

A

By day of 719 notice

50
Q

Shareholder res required to approve off-market C for own purchase

A

OR

51
Q

Two exclusions for stage 3 in FSMA Q

A

Article 33 and Article 67

52
Q

What rights apply to treasury shares

A

561 pre-emption rights

53
Q

What is the doctrine called that means share capital cannot be distributed to Ms unless winding up

A

Doctrine of maintenance of share capital

54
Q

690 - 708 aplies to what

A

Own share purchase

55
Q

When can M agree to defer payment for buy back (kind of buy back)

A

Redemption

56
Q

When is no SR required despite financing out of capital

A

Own purchase + subject to de minimise procedure

57
Q

How do you know if RA arises out of or is complimentary to professional service for FSMA

A

Arises out of same fee quote? Does it naturally arise?

58
Q

Parts of CA on own share purchase

A

690 - 708

59
Q

Article 67 RAO exclusion says what

A

Excluded if necessary part of other transaction

60
Q

What must you check in order to pay for redemption or own purchase out of profits

A

Check distributable profits for it

61
Q

Why is short notice unlikely for own purchase + off-market

A

Bc need to disclose C, so only reduced by 1 day

62
Q

What are the consequences of unlawful payment of dividend

A

M w/ RG for believing unlawful must repay, and potentially breach of Ds duties by Ds

63
Q

When does Article 53 as a specified activity not apply

A

If only giving generic advice on rights arising from different share classes

64
Q

When consider Article 67 RAO as exclusion

A

Article 67 (overarching)

65
Q

19(1) FSMA = what

A

General prohibition against carrying out regulated activity unless authorised/exempt

66
Q

Stage 1 on FSMA Q

A

19(1) FSMA

67
Q

When can M not defer payment for buy back

A

Own share purchase

68
Q

When will FSMA apply

A

If client seeks advise on investment of money in shares of company

69
Q

How are dividends justified

A

By ref to latest accounts

70
Q

658 enshrines what

A

Doctrine of maintenance of share capital

71
Q

Why is it unlikely 190 is triggered for buy back

A

192(a) excludes if purchasing from D in capacity as M

72
Q

What is the reserve arising from reduction of capital treated as

A

Capital, unless court orders otherwise

73
Q

When can BM2 be held for own share purchase + off-market + capital

A

Immediately after GM, to sign C + give conditional authority

74
Q

Why is 177 important if it applies

A

Triggers MA 14

75
Q

What does the D statement of solvency state

A

Company is solvent and will continue to be solvent for 12 months

76
Q

What kind of buy back requires C

A

own share purchase off market

77
Q

Disclosure on off-market own purchase

A

Disclose C 15 days prior to GM and at GM, or sent w/ WR

78
Q

When is the share premium account used

A

Only for FI + share originally issued at premium + being bought back at premium too

79
Q

When consider Article 33 RAO as exclusion

A

If Article 25 SA

80
Q

What kind of shareholder res to approve final dividend

A

OR

81
Q

What can Ms ONLY be paid out of per 830

A

Distributable profits

82
Q

To check for own purchase out of capital

A

AoA permits, profits first, accounts less than 3 months old and accountants verify decision

83
Q

Stage 4 in FSMA Q

A

S must be directly authorised or supervised

84
Q

In-house matters for both redemption and own share purchase

A

Update M reg, check PSC, cancel/reissue share certificates and update minutes

85
Q

How long do creditors have to object to use of capital for buy back

A

5 weeks

86
Q

Do MA permit issue of RS?

A

Yes

87
Q

Where to find specified activities for FSMA

A

Part II RAO

88
Q

What kind of dividend requires shareholder approval

A

Final

89
Q

When must there be notice to creditors after SR approves use capital for buy back

A

Within 1 week

90
Q

Part of CA on redemption

A

684 - 689

91
Q

How does 22(1) FSMA define RA

A

Specified activity and specified investment

92
Q

Who can issue RSs

A

All LimCs, if AoA does not prohibit

93
Q

What D duty is particularly important when deciding to declare dividend

A

172

94
Q

Article 76 RAO applies to what

A

Shares as specified investment

95
Q

Two sections on SR for capital financing needs to be delivered to CH

A

29(1)(a) and 30(1)

96
Q

What is the long-term effect of a scrip dividend

A

Dilutes shareholding for those who do not take up the scrip issue

97
Q

When is payment for buy back treated as income dividend

A

If exceeds amount paid on allotment

98
Q

what part of MA governs payment of dividends

A

MA 30 - 36

99
Q

What happens to equity if buy back funded by FI

A

Equity increases by FI and reduces by buyback

100
Q

What authority is not needed to sell treasury shares

A

551 authority

101
Q

What is a scrip dividend

A

Offer additional shares instead of paying out a dividend

102
Q

641 applies to what

A

Reduction of capital

103
Q

Stage 2 on FSMA Q

A

22(1) defines RA as specified activity and specified investment

104
Q

Article 25 RAO applies to what

A

Specified activity of arranging deals

105
Q

What additional PMM in-house matters take place for own share purchase

A

Keep copy of off-market C for 10 years from purchase

106
Q

How many days prior to GM must off-market C be disclosed

A

15 days

107
Q

Two procedure matters to consider for buy back - kind of contract + D duties

A

If 190 triggered, and if 177 declaration triggered

108
Q

Two relevant specified activities under Part II RAO for FSMA

A

Article 25 arranging deals + 53 advice on investment

109
Q

Must both RSs and shares to be purchased by company be fully paid up?

A

Yes

110
Q

Voting change for capital financing

A

Owner of shares cannot carry res at GM, and excluded in WR

111
Q

Article 33 RAO exclusion says what

A

Excluded if intro to authorised person

112
Q

When does the De Minimis procedure apply

A

Own purchase out of capital from the lower of £25k or 5% of share capital

113
Q

Why do Ms benefit from buy-backs in the long-term

A

Increase earnings per share

114
Q

Disclosure of DSS and AR

A

Sent w/ WR or available at GM

115
Q

Why is reduction of capital used

A

To represent true value of assets that have substantially reduced in value

116
Q

What do Ds do in final dividend

A

Recommend amount of dividend

117
Q

Part of A on reduction of capital

A

641

118
Q

How old must accounts be for financing out of capital

A

Less than 3 months old

119
Q

Where to fine specified investments for FSMA

A

Part III RAO

120
Q

4 things to comply w/ for stage 4 of FSMA Q

A

Member of profession supervised by professional body, no payment from other than client, provide services incidentally to professional service and arises out of or is complementary to professional service

121
Q

What manner of reduction of capital is more favourable bc no ability to challenge

A

Court order

122
Q

When might SR be required to approve off-market C for own purchase

A

If AoA so requires

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