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Law Certificate > Company Financing and Insolvency > Flashcards

Company Financing and Insolvency Flashcards

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1
Q

What kind of share has pre-emption rights

A

ordinary

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2
Q

When can company alter rights attached to a class of shares

A

articles must allow for variation AND
Agreement of 75% of that class of shareholder is usually required

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3
Q

When may variations in rights of class of shares be challenged by minority interest

A

within 21 days of the vote by at least 15% of the class of members that voted against the alternation
court may confirm / cancel

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4
Q

What is defined
he issued share capital excluding any part that carries any right to participate beyond a specified amount in a distribution (dividend or capital)

A

equity share capital

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5
Q

when are shares allotted

A

when a person acquires the right to be listed on the Register of members

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6
Q

when are shares issued

A

once the allotteee receives a letter of allotment or share certificate as evidence of title

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7
Q

How long is pre-emption right open

A

21 days

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8
Q

Y/N
Can a company amend it’s articles of association to incorporate a provision excluding the statutory rights of pre emption

A

No

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9
Q

What may private companies accept as payment for share

A

money
goods
services

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10
Q

What may public companies accept as payment for shares

A

money
goods

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11
Q

Public companies - money requirements

A

25% of nominal value + whole of any premium payable must be paid
original subscribers must pay in cash

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12
Q

Public company - goods requirements

A

independently valued six months before allotment and received within 5 years of allotment

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13
Q

Shares cannot be issued at a discount to their

A

nominal value - where this happens the SH is liable to the company for the unpaid amount + interest

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14
Q

Where shares are issued at a discount, what are shareholders liable to the company for

A

unpaid amount + interest

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15
Q

Can share premium be used
to pay up new shares allotted as fully paid bonus shares

A

Yes

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16
Q

Can share premium be used
To write off expenses incurred on the issue of those shares and any commission paid on those shares

A

Yes

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17
Q

Can share premium be used
To allow the repurchase of debentures at a premium

A

Yes

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18
Q

Can share premium be used
To facilitate a permissible capital payment payment in private companies

A

Yes

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19
Q

Can share premium be used
as a dividend

A

No

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20
Q

Can share premium be used
to write off expenses incurred in connection with the formation of the company

A

No

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21
Q

Can share premium be used
To write off expenses incurred in connection with an issue of debentures

A

No

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22
Q

T/F a public company can issue shares at a discount

A

False

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23
Q

T/F A public company’s shares can never be partly paid up

A

False

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24
Q

T/f A public company can issue shares in return for an undertaking to do work or perform services

A

False

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25
Q

T/F A public company must obtain an independent valuation for non-cash consideration for its shares from its auditor

A

true

26
Q

steps for reducing share capital for any limited company

A

special resolution
Confirmed by court
Creditors are entitled to objected
Plc must re-register as ltd if the reduction results in the nominal value of allotted share capital falling below the authorised minimum

27
Q

steps for reducing the company for private company

A

special resolution
solvency statement within 15 days of resolution
one member with non-redeemable shares must remain
copy of resolution, statement of capital and copy of solvency statement / court order filed with registrar

28
Q

What must be satisfied for a private company to purchase shares out of capital

A

The directors produce statutory declaration of solvency
Declaration is audited
Special resolution is passed
Company advertises resolution
Creditors are given opportunity to reject

29
Q

Private company max dividend

A

accumulated realised profit - accumulated realised loss

30
Q

Public company maximum dividend

A

accumulated realised profit - accumulated realised loss - accumulated unrealised losses

31
Q

When can a public company make a distribution
if its net assets are

A

at the time not less than the aggregate of its called up share capital and undistributable reserves (share premium, capital redemption Reserve, revaluation reserve)

32
Q

How may companies alter share capital

A

increasing allowed shares
Subdividing shares into shares of smaller nominal amount than existing shares
By consolidating and dividing share capital into shares of larger nominal amount than its existing shares

33
Q

Can debentures be issued at a discount

A

Yes

34
Q

Can shares be issued at a discount

A

No

35
Q

within how many days of their creation must charges be registered with the Registrar

A

21 or they become void

36
Q

When are charges effective from

A

date of creation not registration

37
Q

T/F
Fixed charge holders can apply to put a company into administration

A

False

38
Q

T/F
only fixed charge holders can put the company into liquidation once it is in administration

A

False

39
Q

T/F
the administrator is able to make any staff redundant they wish

A

True

40
Q

T/F
the directors are automatically dismissed once the administrator is appointed

A

False

41
Q

T/F
Floating charge holders can apply to put the company into administration out of court

A

True

42
Q

Three ways a company’s life can be bought to an end

A

members voluntary liquidation
creditors voluntary liquidation
compulsory liquidation

43
Q

what kind of liquidation
initiated by directors of a company when in their opinion the company is solvent. To wind the company up

A

Members’ voluntary liquidation

44
Q

CVL
Once notice of liquidation received the creditors must reply within ? working days, the process of agreeing/dissenting to the choice of liquidator must be complete within ? days of resolution to wind up the company. Creditors must be sent a statement of the affairs of the company within ? working days of the decision to wind up the company.

A

3
14
7

45
Q

What kind of liquidation
Any creditor that demands payment of a debt of at least £750 that is not paid within 21 days will be able to petition the courts for a compulsory winding up

A

Compulsory liquidation - company cannot pay debt

46
Q

Is the following a consequence of compulsory liquidation
Seizure of assets after liquidation is void

A

Yes

47
Q

Is the following a consequence of compulsory liquidation

Business may continue

A

Yes

48
Q

Is the following a consequence of compulsory liquidation

Floating charge crystallise

A

Yes

49
Q

Is the following a consequence of compulsory liquidation

Employees automatically dismissed

A

Yes

50
Q

Is the following a consequence of compulsory liquidation

Legal proceedings are halted and non can commence unless court consents

A

Yes

51
Q

Is the following a consequence of compulsory liquidation
disposition/seizure of company property is void

A

Yes

52
Q

What charges/debts entered into a by a company may be invalidated on compulsory liquidation

A

Charges not registered within 21 days
transactions at undervalue (2 years prior)
preferences given 6 months before
floating charges 12 months winding up (2y connected)

53
Q

Conditions to benefit from the plan under CIGA

A

encountered/likely to encounter financial difficulties which affect its ability to carry on as gc
Compromise / arrangement proposed between company and creditors/members and purpose is to eliminate reduce prevent or mitigate effect of those difficulties

54
Q

Creditors can petition for bankruptcy if owed debt, or share of debt exceeding £5000, a petition requires the creditor to demonstrate what?

A

erved statutory demand (21 days notice) on debtor not paid
Attempted to enforce judgment order which has not been satisfied

55
Q

what restrictions are placed on a person after bankruptcy order placed

A

cannot act as director/insolvency practitioner
cannot borrow more than £500 without disclosing bankruptcy
under rules of ICAEW - can’t be chartered accountant

56
Q

is the following included in the bankrupts estate
tools of their trade and other items necessary for use personally in employment

A

No

57
Q

is the following included in the bankrupts estate

Clothing and household items necessary for basic domestic needs of the bankrupt and their family

A

No

58
Q

is the following included in the bankrupts estate

Property held by the bankrupt on trust for another

A

No

59
Q

is the following included in the bankrupts estate

Certain tenancies protected under legislation

A

No

60
Q

How long after bankruptcy order will the bankrupt be discharged

A

1 year, but can be subject to restrictions for 2 - 15 years

61
Q

Advantages of IVA for sole trader

A

sole trader / partner can continue to trade and operate a normal bank account
Flexible proposals can be created
Some restrictions on bankruptcy don’t apply (can retain directorship)
Details are not published in press unlike bankruptcy

Law Certificate (15 decks)

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