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Law > company finance and insolvency > Flashcards

company finance and insolvency Flashcards

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1
Q

O v P- dividends

A

o- not cumulative

p-cumulative

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2
Q

o v p -voting rights

A

o- yes

p- yes: normally restricted

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3
Q

o v p- general meetings

A

o-may attend and vote

p- normally restricted

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4
Q

pre-emption rights o v p

A

o- yes

p- no unless specified in articles or terms of issue

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5
Q

o v p liquidation

A

o- entitles to capital and share of surplus

p- rank above ordinary shares, entitled to repayment of capital only

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6
Q

when can a company alter the rights attaching to classes of shares?

A
  • the articles must allow for variation

- agreements of >75% of that class of shareholder is usually required

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7
Q

can changes to classes of shares be objected to by minority interests?

A 
YES
objections must be lodged with the courts within 21 days of the vote by at least 15% of the class of members that voted against the alteration
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8
Q

when are shares allotted?

A

when they recieve letter of allotment or share certificate= evidence of title

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9
Q

how can new shares be allotted?

A

ordinary res- effective for up to 5 years after

power form the artices

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10
Q

rules which allotments are subject to…

A

where shares are issued wholly for cash- pre-emption rights are granted
- must offer to existing company share holders pro rata to existing holding,
shareholders must be notified in writing
offer must be open for at least 21 days
private comapny may disclude.disapply pre-emption rights by spcecial res

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11
Q

private companies may accept payment for shares in the form of…

A
  • goods
  • money
  • services
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12
Q

public companies may only issue shares in exchange for…

A
  • money= at least 1/4 of the nominal value plus the whole of any premium payable
  • goods=must be independently value 6 months before allotment and received within 5 years of allotment
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13
Q

a company cannot distribute part of its share premium account….

A
  • as dividend
  • to write off expenses incurred in connection with the formation of the company
  • to write off expenses incured in connection with an issue of debentures
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14
Q

shares are transferable in accordance with…

A

the arts

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15
Q

can a company refuse to register shares?

A

yes but must provide notice within 2 months. they still entitles to dividend and return on capital on winding up but not able to exercise all members rights

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16
Q

how long quick are shares transferred under crest?

A

3 days

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17
Q

companies on AIM or Official List…

A

have to publish their share capital in any month which a change has occurred

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18
Q

when must a shareholder fill in a notification form?

A

if shareholding becomes 3% and every 1% thereafter

must do within 2 trading days

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19
Q

reducing share capital: any limited company

A
  • special res
  • confirmation by court
  • creditors entitles to object
  • plc may have to register as ltd if falls below minimum 50k
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20
Q

reducing share cap: private company

A

-speical res
-solvency statement-within 15 days of res
-one member with non redeemable shares must remain
opy of res, statement of cap and solvency statement or court order must be files with registrar

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21
Q

when can a company purchase its own shares?

A
  • redemption or purchase in accordance with CA
  • acquisition of shares in a permitted reduction of capital
  • purchase of shares in complying with a court order
  • forfeiture or surrender of shares in accodance with companies act
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22
Q

when my a private company purchase shares out of capital?

A
  • the directors produce a statutory declaration of solvency
  • the declaration is audtied
  • a special res is passed
  • the company advertises the res
  • creditors are given an opportunity to object
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23
Q

private company dividend formula:

A

accum realised prof less accum realised losses

24
Q

public company dividend formula

A

accum realised prof less accum realised loss less accum unrealised losses

25
Q

how can a company alter share cap?

A
  • by increasing allotted shares
    -by subdividng shares into shares of a smaller nominal amount than its existing shares
    by consol and dividing its share cap into shares of a larger nominal amount than its existing shares
26
Q

can shares and debentures be offered at a disocunt to nom val?

A

debentures yes, shares no

27
Q

what happens when a charge is secured?

A

they have a claim over unsecured creditors

28
Q

properties of fixed charges

A

-attach to specific assets
-charged asset may not be disposed of by the company
-default on the loan by the company enables the charge holder to sell the asset and recover monies owed
-upon liquidation fixed charge holders rank first
BUT if created 6 months before a company becomes insolvent, it may become invalid

29
Q

properties of floating charges

A
  • hover over classes of assets and attaches to remaining assets in the class once crystallies
  • the company can deal in these assets up to the point of crystallisation
  • they rank behind others upon liquidation
30
Q

what is a negative pledge clause?

A

stops the floating charge holders being overtaken by fixed charg eholders of the same asset = may be invalid if company goes into liquidation within 1 year??

31
Q

when must charges be registered?

A

within 21 days

32
Q

what is the function of an administrator?

A
  • rescue the company as a going concern
  • achieve a better result for creditors than winding up
  • realise the companys assets to make a distirbution to preferential shareholders
33
Q

who can seek administration orders?

A

directors, shareholders, creditors

34
Q

how is administration applied for?

A

applying to court and showing that…

  • company cant pay its debts
  • administration order is likely to avoid an incolvency liquidation
35
Q

who must notice of application be given to?

A

qualifying floating charge holder
who must show:
the floating charge is qualifying and enforceable

36
Q

who can appoint an administraotr out of court?

A

directors or qfch

37
Q

in the out of court approach how much notice must be given to qfch? (if being done by directors)

A

5 days

38
Q

in out of court approach, what must be filed at court?

A

notice of intended appointment and actual appointment
declaration that the company is likely to become insolvent
statement and consent from administrator

39
Q

if out of court approach being done by qfch, how much notice must they give and what must they file?

A

2 days notice
notice of appointment
stat dec as to lawfulness of appointment and enforceability of charge
statement and consent form administrator

40
Q

how long do officer and employees have to provide a statement of affairs?

A

have 11 days to comply with the request

41
Q

how much notice for administrator to file his appointment at coho?

A

7 days

42
Q

how much notice to submit a statement of proposal to achieve admin- administrator?

A

within 8 weeks

43
Q

hold a creditors meeting- administrator

A

10 weeks

44
Q

the appointment is terminated in…

A

1 year

45
Q

powers of administrator?

A
  • remove or appoint a director
  • call a meeting of members or creditors
  • apply to court for directors regarding the carrying out of his functions
  • make payments to secured or preferential creditors
  • make payments to unsecured creditors
  • present or defend a petition for the winding up of the company
46
Q

what does the administration moratorium mean?

A
  • no winding up petitions or resolutions may be passed
  • no property can be recovered by creditors
  • no legal proceedisng can commence
  • no securities may be enforced
47
Q

are employees automitcially dismissed under admin?

A

no

48
Q

can administrator sell assets subject to floating charge?

A

yes, without the chargee’s consent

49
Q

can an administrator sell assets subject to a fixed charge

A

with consent of the court

50
Q

what is an alternative to administration?

A

a CVA-company voluntary arrangement

51
Q

what may a cva take the form of?

A

a composition of debts

52
Q

what is a cva often implemented alongisde?

A

further measures such as personal gaurantee by the directors

53
Q

what is required for cva?

A

creditor approval- dont have to have a meeting unless specified

54
Q

within 28 days of the cva being lodged at court….

A

creditors may challenge it on the grounds of…
it predujices their interest
there has been material irregularity in connection with the meetings held to approve the cva application

55
Q

what do provisions in the insolvency act 2000 allow for?

A

directors of small companies to apply for a moratorium- during which they may prepare and submit a proposal to creditors.

56
Q

three types of liquidation?

A

members voluntary
creditors coluntary
compulsory

Law (7 decks)

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