Chapter 15: Shares and securities

Question 1

Matching rules

Answer 1

Same day

Next 30

Share pool

Question 2

Quoted shares price are at what cost

Answer 2

The mid point / mid price (average) on that day

Question 3

Bonus issue

Answer 3

No consideration

added to the original acquisition

normal share matching rules are applied after the bonus have been allocated

Question 4

Rights issue

Answer 4

Purchase of more shares by existing shareholders

Question 5

Re-organisation

Answer 5

Occurs when new shares and securities are issued in exchange for the original shares held

The new shares and securities replace the old shares. The original cost is allocated according to the market value at the date of the re-organisation

Question 6

Takeovers

Answer 6

Paper for paper, no gain crystallises

if takeover is funded wholly or partly in cash then a chargeable gain will crystallise at the date of takeover

Question 7

Gilts and qualifying corporate bonds

Answer 7

Gilts and government issued loan stock

A QCB is corporate loan stock, not convertible into shares, example: Tesco loan stock

disposals are exempt from CGT