Business

Question 1

different classes of shares

Answer 1

Ordinary shares - voting rights

Preference shares - Usually no voting rights, often entitled to fixed dividend

Deferred shares - no right to dividend until certain conditions met.

Question 2

What is required for share buy-back out of capital?

Answer 2

• Directors statement of solvency
• report by the company auditors
• notices in the London gazette.

Question 3

De minimus cash exemption for share buy back out of capital

Answer 3

Company can purchase shares out of capital up to an aggregate purchase price in any financial year of the lower of
A) 15k or
B) nominal value of 5% of company fully paid share capital as at the beginning of financial year.

Question 4

What is required for share buy-back out of profits?

Answer 4

Ordinary resolution.

Question 5

Procedure for registering a charge?

Answer 5

21 days - otherwise not enforceable against liquidator.

Question 6

what is a floating charge?

Answer 6

• Charge over a class of assets of company
• The composition will change
• Until crystallisation (even stipulated to occur).

Question 7

some debt options?

Answer 7

• Overdraft - like usual bank.
• Term loan - fixed term loan
• Revolving credit facility - borrow pay it back and borrow it again

Question 8

Advantages and disadvantages of debt equity?

Answer 8

Advantage = flexible to arrange in terms of process + maintain control over company + tax efficiency

Disadvantage = cost of finance + risk if you default on a loan

Question 9

Advantages and disadvantages of Equity finance ?

Answer 9

Advantages = brings ash into business without risk of losing assets + potentially valuable new members

Disadvantages = lose control + requires approval for granting shares.

Question 10

What is required for directors to pass written resolution?

Answer 10

Unanimous decision.

Question 11

What is required for short notice?

Answer 11

actual majority and 90% or 95% for public.

Question 12

What is the special notice of 28 days required for resolutions for?

Answer 12

• Remove a director
• Appoint an auditor
• Remove an auditor before expiration of his term.

Question 13

What does statute require special resolutions for ?

Answer 13

• Altering articles
• Changing the name of the company
• Dis-apply statutory pre-emptive rights on issue of new shares.

Question 14

What are required for shareholders to pass written resolutions?

Answer 14

simple majority.

Question 15

What is a substantial property transaction?

Answer 15

non-cash asset from director or person connected that:
- Exceeds £100k or
- 10% of net asset value and more then £5k.

Question 16

What is required for a SPT

Answer 16

Declaration of interest and ordinary resolution of shareholders.

Question 17

Consequences of not gaining approval?

Answer 17

Director must account to company for any gain made and transaction is voidable.

Question 18

When is an ordinary resolution required for director loans?

Answer 18

• Over 10k for personal loans
• Over 50k for business loans.

Question 19

What is required to appoint a director?

Answer 19

• Ordinary resolution by shareholders
• AP01

Question 20

How to appoint director without ordinary resolution?

Answer 20

By granting them a service contract of less than 2 years.

Question 21

What % is required for short notice meeting?

Answer 21

90% for model articles Private.
95% for model articles public.
95% for Table A articles both.

Question 22

Process of events in board meeting ?

Answer 22

Board meeting notice - board meeting - general meeting notice - general meeting - board meeting