c9 questions Flashcards
Any authority conferred on a director to allot shares must state the maximum number of shares to be allotted as well as an expiry date by which the shares should be allotted.
The expiry date is:
A. Within two years of the authority being conferred
B. Within five years of the authority being conferred
The authority can be altered by:
C. Ordinary resolution
D. Special resolution
Select one or more:
a. A
b. B
c. C
d. D
B C - This can be altered by an ordinary resolution, even if this constitutes an alteration of the articles (which would normally require a special resolution)
In relation to the transfer of shares by electronic means:
Requirements
Does the CREST transfer system operate in respect of all shares?
A Yes
B No
Are companies obliged to permit paperless transfers of shares?
C Yes
D No
B plc only
D although regulations may be made by the Treasury or the Secretary of State that Co may be required to adopt such paperless holding and transfer of shares
In order for a private limited company to issue redeemable shares, the company’s articles of
association must contain the relevant authority.
B - the company’s articles may, however, restrict or exclude the issue of redeemable shares.
When shares in a limited company are redeemed, they are treated as cancelled and the amount of
the company’s issued share capital is diminished by the amount of the redemption payment.
A True
B False
A company must file notice of redemption and a statement of capital with the Registrar of
Companies within one month following a redemption of shares.
C True
D False
B - diminished by the nominal value of the shares
(note: plc - not cancelled - treasury shares)
C
Rugs plc has recently purchased 500 of its own shares with funds which comprised part of the
company’s distributable profits. The shares have been cancelled and the company’s issued share
capital has reduced by £1,000, which amount has been transferred to the company’s capital
redemption reserve.
Requirements
Are the following statements true or false?
The capital redemption reserve of Rugs plc is treated as part of the company’s paid up share capital.
A True
B False
The capital redemption reserve of Rugs plc may not be used to pay up new shares which are allotted
to members as fully paid bonus shares.
C True
D False
where shares are redeemed or purchased out of Co profits, the amount by which the Co issued share cap decreases when shares are cancelled are transferred to the capital redemption reserve.
this reserve is:
- treated as Co fully paid up share capital (A)
-BUT it may be used for bonus shares (D)
In which of the following situations may a public limited company lawfully offer financial assistance
for the purchase of its shares (provided its net assets are not thereby reduced)?
(1) W here the company lends money as part of its ordinary business
(2) W here the company lends money to a director without a service contract in good faith to enable
them to acquire fully paid shares in the company
(3) W here the company gives assistance in the interests of the company for the purposes of an
employee’s share scheme
A (1) and (2) only
B (1) and (3) only
C (2) and (3) only
D A ll of the above
B - a Co may lend to its ees for this purpose but not to directors who are also employees
Which of the following best defines a debenture?
A A charge over a company’s goodwill
B T he registration document used to register a fixed or floating charge
C A document that records the terms of any loan
D A document that records the terms of any secured loan
C - Whether a loan is secured or unsecured, the written acknowledgement of its terms is called a debenture
A floating charge created over the ‘undertaking and assets’ of a company applies only to current
assets at the time of the charge.
A True
B False
A floating charge is converted into a fixed charge upon crystallisation.
C True
D False
B the charge will also apply to future assets (charge attaches to a class of assets)
C
A charge may be avoided by a liquidator as a preference where it is created within a specified time
before a company becoming insolvent.
Requirements
What is the specified time for a fixed charge?
A 6 months
B 9 months
What is the specified time for a floating charge?
C 9 months
D 12 months
A
D
fixed/sixed
floating/12 months
can a debtor sell an asset for which there is a:
fixed charge
floating charge
fixed charge - no - cannot be sold without the consent of the charge holder
floating charge - can sell the assets unless the charge crystallises (liquidation) in which case it becomes a fixed charge and cannot be sold
Melanie is the company secretary of Swansong Ltd and seeks your advice. She has failed to register a
charge entered into by Swansong Ltd within the prescribed period laid down by the Companies Act
2006 and wants to know whether the charge is still valid.
Requirement
What is your advice?
A T he charge is void against any liquidator or administrator but not the chargee or any other
creditor.
B T he charge remains valid but Swansong Ltd is liable to a fine.
C T he charge remains valid but the chargeholder has the option of demanding immediate
repayment.
D T he charge is void against any liquidator, administrator or creditor
D
must register new charges < 21 days
failure to register:
-fine
-charge is void against any liquidator, administrator, creditor
Rules in relation to the issue of shares at premium include:
Requirements
A company may not, without the authority of its articles, issue its shares at a premium.
A Yes
B No
Shares can be issued at a premium not only for cash but also for consideration other than cash.
C Yes
D No
B - no express authority is required in Co articles
C - shares can be issued at a prem for non-cash consideration
Sarah wants to sell her shareholding in Albatross plc.
Requirement
Which of the following is correct?
A If Sarah sold her shares to a person of whom Albatross plc disapproved of it could, without
providing any reason, refuse to register the share transfer.
B Sarah will be able to sell her shares through a recognised stock exchange provided they have
been listed.
C Sarah must offer to sell her shares to the company before she can offer to sell them to any other
person.
D Sarah will not be able to sell her shares unless she can, within three days of any agreement to sell
being concluded, produce a printed share certificate as evidence of her title to the shares.
B
A company has adopted model articles of association.
Requirement
Which of the following is required for it to vary class rights?
A A n agreement of the directors
B A n ordinary resolution of the relevant class
C A n alteration of the articles
D A special resolution of the relevant class
D
rights issue - how long do members have to accept the offer of new shares?
21 days
