Companies Act Flashcards
What are pre-emption rights?
Rights given to existing shareholders which prevent dilution, have right of refusal to new shares issued for cash
What is a scheme of arrangement?
Compromise arrangement with shareholders or creditors allowing it to restructure itself
What is a squeeze out?
Bidder acquires 90% of shares or 90% of voting rights, bidder may oblige shareholders to sell any remaining shares to them
What is a sell out?
Bidder has acquired >90% in value, shareholders who did not accept offer have right to oblige bidder to acquire their shares
How many days given to shareholders to make a decision in pre-emption rights?
14 calendar days
What are the exceptions for listed companies for pre-emption rights?
- Special resolution: (Suspend up to 5 years with a special resolution)
- General approval: if issuing no more than 5% of issued share capital in one year, 7.5% over three years
What are the restrictions on non pre-emptive issues pricing based on Listing Rules?
Price cannot be at a discount of more than 10% to the middle market price
When may the share capital be reduced?
AoA allow it, a special resolution is passed and courts approve action for plc
When can shareholders appoint inspectors from BEIS to investigate company?
1) Ordinary resolution is passed or
2) >200 shareholders or owners at least 10% of issue shares
Define financial assistance rule (CA S678-680)?
Prohibits a public company or its subsidiary from directly or indirectly giving financial assistance to a third party for the purchase of its own shares or to reduce or discharge a liability incurred by a purchaser or third party for purpose of acquisition
What is the penalty for financial assistance in the purchase of shares in itself?
2 years and unlimited fine
Contracts are void
What is the notice period for AGM?
21 calendar days for plc and 14 calendar days for ltd
What is the notice period for GM?
21 calendar days for plc (may shorten to 14 days if shareholders agree) and 14 calendar days for ltd
Who can propose a resolution?
1) Directors,
2) Shareholders with either 5% of voting rights, >100 shareholders holding at least £100 paid-up share each
When does a company / person have to disclose shareholdings?
If no previous interest, when shareholdings are above 3% or any change to whole % point if over 3% (disclose within 2 business days)
What requirements does a plc must satisfy?
- Minimum of two shareholders
- Minimum share capital of £50,000 (at least 25% nominal paid up)
- Registered as plc
- Memorandum stating as plc
Which are the primary legislation for money laundering?
- POCA
- SOCPA
- Terrorism Act 2000
- Counter-Terrorism Act 2008
Describe 3 stages of money laundering
- Placement: proceeds of any crime are placed in bank
- Layering: Cheque is drawn to buy different investments to cover audit trail
- Integration: Money appears as legitimate source of income
What is the maximum penalty for money laundering?
14 years and or unlimited fines
What is the maximum penalty for prejudicing a money laundering investigation?
Five years and or unlimited fine
What is the maximum penalty for failure to comply with Money Laundering Regulations?
Two years and or unlimited fine
What are 3 main requirements for firms under the Money Laundering Regulation 2017?
- Administrative
- Training of relevant employees
- Preventative
What is the difference between money laundering and terrorist acts?
Size of fund and origin of fund being legitimised
What is the maximum penalty for bribery?
10 years and or unlimited fine
Define inside information and insider
Inside information is unpublished, specific or precise, from an inside source and price sensitive
Insider can be either primary or secondary
What are the excluded investments in relation to insider dealing?
- Assets with no secondary market
- Commodities and commodity derivatives
- Sport and forward FX
- Insurance policies
What are the defences for insider trading? (3)
1) No intent
2) Not price sensitive and already publicly available,
3) Following required procedures
What is the maximum penalty for insider trading in the Crowne Court?
7 years and unlimited fine
What is the maximum penalty for insider trading in the magistrates court?
£5000 and up to 6 months
What are the special defenses for insider trading?
1) Market makers
2) Market information
3) Price stabilisation
What does the S89-92 FSA 2012 cover?
Misleading Statements and Impressions
What is the maximum penalty for misleading impressions or statements in the magistrates court?
£5000 and up to 6 months
What is the maximum penalty for misleading impressions or statements in the Crowne Court?
7 years and unlimited fine
What are the penalties for Market Abuse (EU MAR)
Civil law in UK so lighter burden of proof and effect-based
What is the purpose / scope of MiFID?
- Increase post-trade transparency
- Allows for passporting across EEA
- Ensure cost effective venues are available across EEA
What services can be passported under MiFID?
- Broker
- Execution of orders
- Portfolio management
- Investment services
- Underwriting and placing
- Operating MTF or OTF
What services are excluded for MiFID? (4)
1) Hedging derivatives
2) Gambling
3) Insurance companies
4) Commodity trading
