All the fucking theory Flashcards
Book value per ordinary share
Dollar amount of net assets (SI) for each ordinary share of a company’s capital
Characteristics of a company
Separate legal entity, Perpetual succession, Separation of ownership and management, Taxation, Regulation and Supervision (Double Taxation)
1) Unlimited Liability or Limited Liability?
Unlimited= shareholders have unlimited liability for the debts of the company. even private assets can be called upon to settle the debts! Limited= shareholders' liabilities for the debts of the company is limited. Creditors cannot claim the personal properties of shareholders.
2) Limited by guarantee or shares?
Guarantee= Limited to a fixed amount. Proceeds are expected to cover expenses. Shares= Company limits the shareholders' liability to the amount unpaid on the shares held by them.
3) Public or private?
Public= 1 to infinite no. of shareholders, distinguished by Ltd., no restriction on rights of shareholders to transfer their shares, can raise funds by issuing shares and debentures to members of the public, can raise capital
Private=1 to 50 shareholders, shareholders have restricted rights to transfer their shares, cannot raise funds
Exempt Private Company
Not more than 20 members, need not file for audited accounts
Memorandum of Association
Name, amount of share capital, limited or unlimited, name and particulars of subscribers, no. of shares taken by subscriber
Articles of Association
Rules for internal company management
Significance of Book Value
There is no direct relationship between book value and market value. Other factors include further earning potential etc.
Ordinary Shareholders
Can vote for directors, receive dividends after preference shareholders, rate of dividends not fixed and depends on profits made, receive liquidation payments after pref shareholders
Cumulative Preference Shares
Preference shares where dividends are cumulative. Undeclared dividends accumulate, and accumulated amount+current year’s preference dividends must be paid before ordinary shareholders
Rights issue
right given only to existing shareholders to buy a certain number of new share, below current market price. shareholders are entitled to subscribe the new issue of shares in proportion to their existing shareholding.
Dividends
what a company pays its shareholders for their capital contributions and it can only be paid out of profits
Interim dividends
dividends issued during the year
Declaration date
“contigent liability”=provision for dividend
