BL - Shares - General

Question 1

Do shares in a company have to have a fixed nominal value?

Answer 1

Yes - s542(1) CA 2006

Question 2

What are subscriber shares?

Answer 2

Shares purchased by the first members of a company

Question 3

When are shares ‘Allotted’?

Answer 3

Shares are allotted when a person acquires an unconditional right to be included on the company’s register of members in respect of those shares

Question 4

What are Treasury Shares

Answer 4

Shares bought back by the comapny itself

Question 5

What rights are attached to ‘Ordinary Shares’

Answer 5

• a right to vote at general meetings
• a right of dividend
• a right to surplus on winding up

“shares other than shares that as respects dividends and capital carry a right to participate only up to a specified amount in a distribution”

Question 6

What are Preference shares

Answer 6

Shares that have a preference when paying a dividend or a return of capital. Normally a set percentage of the share value

Normally cumulative

Question 7

What are Participating Preference Shares?

Answer 7

May participate in surplus profits and/or surplus assets in the company on winding up.

NOTE: does not relate to voting rights

Question 8

How can a company vary its existing class rights?

Answer 8

• 75% of the members in that class agree in writing
  OR
• special resolution passed at a separate general meeting of holders of that class.

Question 9

What can members of a class do if they object to the variation?

Answer 9

-Shareholder holding 15% of the relevant shares may
- apply to the court
- within 21 days
-of the resolution to have a variation cancelled.

Following the application, the variation will not take effect unless and until it is confirmed by the court.
The court will not approve the variation if it feels that it unfairly prejudices the shareholders of the class in question.

Question 10

What is a ‘Final dividend’?

Answer 10

Approved by an ordinary resolution following the financial year end.

Question 11

What is an ‘Interim Dividend’

Answer 11

The directors may pay an interim dividend if the company has sufficient distributable profits. The can be paid without an ordinary resolution.

Question 12

What is the difference between an allotment, transmission and transfer of shares?

Answer 12

• Allotment is where the company issues new shares in return for the subscription.
• Transmission is an automatic process in the event of death or bankruptcy.
• Transfer is the transfer of existing shares.

Question 13

What should be included in a prospectus?

Answer 13

all information necessary to enable investors to make an informed assessment of the
- financial status of the company and
- the rights attaching to the shares.

Question 14

When can directors refuse to register.

Answer 14

• must give reason unless
• they believe the transfer to be fraudulent.

Question 15

Are there pre-emption rights on transfers in the standard MA’s

Answer 15

No.

Note this is a transfer not an allotment

Question 16

What is required for a share transfer?

Answer 16

• stock transfer form signed by transferor and
• share certificate
• given to the new shareholder.

Question 17

When does beneficial & legal ownership pass to the new shareholder?

Answer 17

• Beneficial title passes on the execution of the stock transfer form.
• Legal title passes on the registration of the member as the owner of those shares in the register of members of the company. A new share cert will be issued within 2 months

Question 18

How does stamp duty work?

Answer 18

Stock transfer form must be stamped before the new owner can be registered as the holder of those shares.

If over £1,000 a 0.5% fee is charged.