Allotment, Transfer and Transmission of Shares Flashcards
Which of the following best describes an allotment of shares?
A. A transfer of shares between existing shareholders
B. The issue of new shares by a company
C. The conversion of debt into shares
D. A company repurchasing its own shares
B. The issue of new shares by a company
Explanation: An allotment refers to the issue of new shares by the company in return for capital. Transfers involve existing shares.
What is the minimum nominal value a share can be allotted for under CA 2006?
A. Any amount agreed between parties
B. Its nominal value
C. The market value
D. Zero
B. Its nominal value
Explanation: Under s580 CA 2006, shares cannot be issued at a discount to their nominal (par) value. The market value can be higher, but not lower.
What happens when a shareholder dies?
A. Their shares are cancelled
B. Their shares pass to the directors
C. The shares are forfeited to the company
D. Their shares pass to their personal representatives
D. Their shares pass to their personal representatives
Explanation: On death, transmission of shares automatically occurs to the personal representatives, who can choose to register or transfer the shares.
A private company issues a public advert offering shares to anyone interested. Which section of CA 2006 is likely breached?
A. s755
B. s544
C. s561
D. s760
A. s755
Explanation: s755 prohibits private companies from offering shares to the public. Public invitations like this must be avoided by private companies.
James wants to buy shares from his friend, an existing shareholder. The company’s articles contain a right of first refusal clause. What does this mean?
A. James can buy the shares without restriction
B. James must make a public offer first
C. James must get board approval to buy the shares
D. The shares must first be offered to existing shareholders
D. The shares must first be offered to existing shareholders
Explanation: Pre-emption rights on transfer (if in the Articles) require shares to be offered to existing shareholders first before third parties.
Which document must be used to transfer legal title of shares?
A. A share certificate
B. A director’s resolution
C. A stock transfer form
D. An ordinary resolution
C. A stock transfer form
Explanation: Legal transfer of shares is done via a stock transfer form, signed by the transferor and submitted with the share certificate.
Anna wishes to buy new shares in a private company. She is not an existing shareholder or employee. The offer is sent via email to 100 random businesspeople. What is the issue here?
A. It breaches s112 CA 2006
B. It breaches s561 CA 2006
C. It breaches s755 CA 2006
D. It breaches stamp duty rules
C. It breaches s755 CA 2006
Explanation: This is an impermissible public offer by a private company. Private companies may not offer shares to the public under s755.
John receives a transfer of shares by signing a stock transfer form. The company delays registering him for 3 months. What are they in breach of?
A. s776 CA 2006
B. s580 CA 2006
C. s547 CA 2006
D. s303 CA 2006
A. s776 CA 2006
Explanation: s776 requires the company to issue a new share certificate within 2 months of receiving the transfer. Delays may breach this.
A transfer of shares is made, but the directors refuse to register it without giving a reason. The MA applies. What is wrong?
A. They must always approve transfers
B. They are allowed to reject for any reason
C. They can only reject treasury share sales
D. They must provide a reason under s771 CA 2006
D. They must provide a reason under s771 CA 2006
Explanation: Even though directors may refuse a transfer under MA 26(5), they are required to state their reasons under s771.
A shareholder wants to sell shares for £5,000. What is the correct amount of stamp duty payable?
A. £0
B. £5
C. £10
D. £25
D. £25
Explanation: Stamp duty is 0.5% of the consideration, rounded up to the nearest £5. 0.5% of £5,000 = £25.
