Chapter 12

Question 1

Shares are personal property and can be bought, sold or mortgaged by the shareholder

Answer 1

True

Question 2

Can a fraction of a share exist ?

Answer 2

No

Question 3

Can a share beheld by more than two people ?

Answer 3

Yes

Question 4

Called up share capital

Answer 4

When shares are issued by installments and as they become due the company formally asks members to pay. So it is issued capital for which calls have been made whether or not members have actually paid the installment

Question 5

Paid up share capital

Answer 5

Amount which has actually been paid to the company by shareholders

Question 6

A public company must have an minimum issued share capital of £50,000 (or euro equivalent) of which at least 25% must be paid up

Answer 6

True

Question 7

Ordinary shares

Answer 7

generally give the holders full voting rights. There is no limit on the size of distribution they receive, and on winding-up they participate fully in the distribution of surplus assets (if there is one – if a company is wound up insolvent, by definition there will be nothing for the shareholders).

Question 8

Preference shares

Answer 8

usually give the holder fixed, priority dividend rights which accumulate from year to year if unpaid. They do not usually have voting rights, except at meetings of preference shareholders.

Question 9

What must happen if a member of a company wants to transfer shares to someone else

Answer 9

There must be an alteration in the company’s register of members and new share certificates must be issued to reflect the changed situation

Question 10

Transfer of shares ex div

Answer 10

The transferor retains the right to any dividends later declared for the financial year during which the shares were held

Question 11

Transfer of shares cum div

Answer 11

The transferee acquires the right to any dividend earned but not yet paid at the time of the transfer

Question 12

Can power be given by the articles to directors to refuse registration

Answer 12

Yes

Question 13

Other classes of shares

Answer 13

Redeemable shares - issued on terms that the company may buy them back at a future date
Non voting shares - carry no rights to attend general meetings (may be issued to employees to reward them with dividends when the company is successful)
Management shares - carry extra voting rights - often used so original owners retain control when additional shares are issued to outside investors