CCA - Part 1-4 Flashcards

Question

Share premium definition

Answer 1

Shares are often allotted for more than their nominal value - the excess is known as the share premium

Answer 2

The UK Listing Authority requirements differ Sponsor required

Answer 3

A standard listing allows companies to have their shares traded on the London Stock Exchanges Main Market

Answer 4

All listed companies can be described as quoted companies but not all UK quoted companies are listed.

Answer 5

Act within their powers Promote the success of the company Exercise independent judgement Exercise reasonable care, skill and diligence Avoid conflicts of interest Not accept beneﬁts from third parties Declare interests in transactions or arrangements

Answer 6

Reappointment of the director Increase in authorised capital Authorisation of directors to allot shares Reappointment of auditors Capitalisation of profits

Answer 7

Alteration of Articles Change of name Company status re-registration Reduction of capital Purchase of own shares Dis application of pre-emption rights Wind up voluntarily

Answer 8

Members voluntary winding up A **solvent** winding up Directors are able to make a **statutory declaration** that the company will be able to **pay its debts in full within 12 months** from commencement of the winding up Creditors voluntary winding up Directors unable to make a statutory declaration of solvency Meeting of the creditors must be called and held within 14 days After meeting of the members at which a resolution to wind up is passed (s.98 IA 1986)

Answer 9

Raise new and replace existing funds Securities created

Answer 10

Where shares may be freely traded Securities traded

Answer 11

Under scrip dividend scheme: Members may elect to **receive dividends by the issue of fully paid shares** in lieu of cash dividends **Authority** must be contained **in company's Articles** Or passed by **members resolution**

Answer 12

Member elects to receive dividends by purchasing existing shares No authority by members required Member will have to pay stamp duty when shares are purchased

Answer 13

Quorum for Board meetings is set out in a companies Articles MA plc reg 10 MA ltd reg 11 Is 2 directors unless directors decide otherwise If directors fall below quorum, director may appoint another director No other business may be passed apart from appointment of additional director until the meeting is quorate This may be done by director or by a general meeting of the members to approve the appointments

Answer 14

Becoming a member may involve the assumption of liabilities in respect of the shares held Not considered good practice to accept minors as members of a company in their own name Because their responsibilities would be voidable during their minority Where shares are partly paid, this would impose an obligation to pay any calls that may be made by the directors The obligation to pay is voidable by a minor, sanctions for non-payment are unenforceable Company should request that the shareholding be held in the name of a suitable adult

Answer 15

A closed period forms part of the framework for the MAR and controlling inside information, which directors of a listed company are obliged to maintain Inside information is deemed to exist during a closed period An insider (someone on the insider list) must not deal in the securities of the company during a closed period A closed period is the period of 30 days prior to an announcement of the company's full year or half year financial report

Answer 16

Transfer of shares should be supported by stock transfer form Stamp duty payable on transfers with a value of more than £1000 at a rate of 0.5% Transfer valued at £500 exempt Transfer valued at £5,500 is liable Prior to registration by the company, necessary for the stock transfer form valued at £5,000 to be stamped by HMRC Not required for stock transfer valued at £500, appropriate declarations should be completed on reverse of stock transfer form

Answer 17

Returns may be filed at Companies House Hard Copy Electronically via WebFiling facility Via an approved software filing service Paper based simple, filing via electronic has several advantages: . Cheaper and quicker, with automatic confirmation of fiing . Reduces likelihood of error due to inbuilt checks and pre-population of data . Rejection rates are lower . Environmentally friendly alternative . Higher level of security via the PROOF system (PROtected Online Filing)

Answer 18

Effective Board is key to long-term success To maximise Board effectiveness, should be reviewed regularly The evaluation can assess the skills, knowledge and working practices of the Board Consider areas that might need improvement The UK Corporate Governance Code recommends listed companies undertake an annual, formal and rigorous evaluation Of its performance, committees and individual directors The code recommends that for the Boards of FTSE350 companies, this review should be conducted by an external facilitator at least once every 3 years Details of how the evaluation was undertaken should be included in the company's annual report (corporate governance section) Together with a summary of any issues found and steps being taken to address them

Answer 19

Carry no rights to vote and usually no right to attend general meetings

Answer 20

Used if profit is expected to be made The liability of members is limited Annual financial information must be published and available to the public (via Companies House) Profits will be assessed for tax on the company Shares can only be offered to a restricted membership and cannot be offered to the public in excess of 100 persons

Answer 21

Used if profit is expected to be made The liability of its members is unlimited Annual financial information may be kept confidential Profits will be assessed for tax on the company Shares can only be offered to a restricted membership and cannot be offered to the public in excess of 100 persons

Answer 22

Definitive proof of membership can only be obtained by examination of the register of members A share certificate provides prima facie evidence of title s.768 CA 2006

Answer 23

Share certificate provides prima facie evidence, also a risk of a lost certificate being used fraudulently to support a transfer of shares Company should seek protection by asking shareholder to **provide an indemnity** to the company against the liability which may arise on a fraudulent transfer Indemnity should be joined in by bank, insurance or trust company On receipt of completed indemnity, a replacement marked 'duplicate' should be issued The register of members should be annotated to note the original was lost and a duplicate issued

Answer 24

Under the MAR, it is not obligatory for a listed company to prepare a share dealing policy The primary obligation of companies under MAR relates to: **the control and disclosure of inside information and dealing by PDMR's** responsibilities for compliance mainly fall upon the PDMR's and anyone else on an insider dealing list Listed companies believe it is helpful to have a share dealing policy to provide clarity and reduce chances of breach

Answer 25

Total value of shares that have been issued

Answer 26

Maximum amount of share capital that a company is allowed to issue to its shareholders as per its constitutional documents.

Answer 27

Total nominal value of shares a company has alloted Person acquires right to be included in register of members

Answer 28

Combined total of the nominal value of shares that has actually been paid

Answer 29

Paid up share capital plus the amount called for/ installment amount due

Answer 30

Ordinary voting capital

Answer 31

Capital that a business raises by taking out a loan.

Answer 32

Fixed value attached to all the shares in a limited company Nominal value represents the minimum value a share can be allotted for

Answer 33

Minimum value a share can be allotted for Helps determine how much a shareholder will be required to contribute upon the company's liquidation If the shareholder has paid the nominal value, they will not be required to contribute any more

Answer 34

First directors appointed upon the companies incorporation It is then a matter for the articles If articles are silent, model articles apply (ltd reg 17) Ordinary resolution (if articles are excluded) or decision of directors

Answer 35

1. Resolution to take place at a meeting - written resolution procedure cannot be used (CA 2006, s. 288(2)(a)). 2. Special notice of a s.168 resolution is required - namely 28 days. 3. A copy of the resolution must be send to directors whose resignation is sought. 4. The director whose removal is sought has the right to protest against his removal and, to that end, may address the meeting (s. 169(2)) and circulate written representations to the meeting (s. 169(3)-(5)). 5. While s. 168 allows a company to remove a director, it will not deprive the director that has been removed of any compensation payable as a result of the removal (s. 168(5)(a)).

Answer 36

1. Share offer 2. Scale back 3. Rights issue 4. Consolidation 5. Takeover 6. Scheme of arrangement

Answer 37

Ordinary Non-voting Preference Deferred Cumulative Redeemable

Answer 38

Register of Members Only individuals or legal entities should be registered English partnerships, trusts/ share investment clubs must not be entered

Answer 39

Register of Directors (name, service address, country of residency, nationality, occupation, DOB, date of appointment, date of termination) Directors residential addresses Directors service contracts Directors indemnities Books of director meetings, resolutions

Answer 40

Interest in voting shares

Answer 41

Any member of the company may inspect the register free of charge (1) and anyone else may inspect it on payment of a fee (1). Inspection requests should state the reason for the inspection. If this is not included it should be sought by the company (1). The company must either comply with the request or seek permission from the Court to refuse it (1). Permission to refuse inspection will only be given where the request is not made for a proper purpose (1). If the Court agrees the request is not for a proper purpose it will make an order directing the company to refuse it (1)

Answer 42

Registered office SAIL (Single Alternative Inspection Location) Central register (for small, private companies)

Answer 43

Removal of director before expiration date Fill causal vacancy of auditor Reappoint retiring auditor appointed to fill casual vacancy Remove auditor before expiration of term

Answer 44

Ordinary Special Ordinary resolutions requiring special notice Extraordinary

Answer 45

Pre 2006 Occur in class meetings

Answer 46

Shares are allotted when person acquires right to be included on the register of members s.558 CA (2006) Shares are issued with a persons name is actually entered onto the register of members

Answer 47

Rights for owner to share in profits of the company Vote at general meetings May be split into different types of rights (Voting rights, dividend rights, capital rights, redemption rights)

Answer 48

Priority over other share classes Unless PS holders receive dividend, no dividends payable to other share class No further right to further dividends Common to restrict voting rights to specific situations

Answer 49

Yes but not all public companies are listed. Public companies can be listed or unlisted on the stock exchanges

Answer 50

A stock that is described as 'listed' is a stock that meets the requirements of the top tier exchange/market. Other stocks that are bought and sold on a second- or third-tier market are not described as listed, but often simply referred to as being 'traded' or 'quoted' on that exchange.

Answer 51

To or from that of a company limited by guarantee From being a CIC company

Answer 52

Order: Traded - has shares Listed - from that company can be listed on UK official list Quoted - listed company quoted as being on one of the official listed dealing houses