Company Finance Flashcards

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1
Q

What is allotment of shares ?

A

Creates shares and gives them out

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2
Q

What is transfer of shares ?

A

Existing shares sold to another shareholder

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3
Q

What is buyback of shares ?

A

Buys its own shares back from shareholders

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4
Q

Three questions to consider with allotment of shares ?

A
  • are there constitutional restrictions ?
  • do directors have authority to allot shares ?
  • are there any pre-emotive rights ?
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5
Q

What happens in allotment of shares if model articles haven’t been updated since 2009 ?

A

They will need to pass an ordinary resolution to remove Authorised allotment of share capital

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6
Q

Under allotment of shares do directors have authority to allot ?

A

If it is one class of shares then they can

If it will create multiple must obtain ordinary resolution from shareholders

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7
Q

What if pre-emotive rights apply in allotment of shares ?

A

Then they can remove these via a special resolution

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8
Q

What are requirements for regular buyback ?

A
  • Articles mustn’t forbid it
  • shares must be fully paid
  • ordinary try resolution
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9
Q

What are requirements for buybacks out of capital ?

A
  • statement of solvency
  • statement of auditors confirming reasonable
  • special resolution
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10
Q

What are dividends paid out of ?

A

Paid out of profits of that year or previous but not out of capital

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11
Q

What is the order in priority of charges ?

A

1) Mortgages
2) fixed charge
3) floating charge

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12
Q

What is a mortgage ?

A

Highest form of security involves legal transfer of ownership to mortgagee

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13
Q

What is a fixed charge ?

A

Fixed charge on part or whole of an asset. First fixed charge registered takes priority

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14
Q

What is a floating charge ?

A

Equitable charge over the whole or a class of the company - assets constantly changing

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15
Q

What is a negative pledge ?

A

Prohibits company from creating a later charge that takes priority over floating charge

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16
Q

What does it mean if the charge is not registered ?

A

That charge is void against the liquidator or administrator of the company

17
Q

What is the procedure for registering charge ?

A

Within 21 days of charge must be filed at companies house (court can extend this position)

18
Q

What date are the charges judged from when determining priority ?

A

Date the charge was created if correct registering formalities are followed

19
Q

What is a revolving credit facility ?

A

Allows company to draw and repay funds flexibly

20
Q

When is a term loan from a bank useful ?

A

Loan is repayable according to agreed repayment schedule,

21
Q

What is a debenture ?

A

Loan agreement between borrower and lender - gives security over borrowers assets, only LLPs and companies can enter these

22
Q

When would pre-emptive rights need to be changed ?

A

If standard rights in s 561 companies act have not been disapplied

23
Q

How to calculate dividend payout ?

A

6% - 6% of £1 shares x number of shares