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BLP > Debt and Equity Finance (SGSs 8,9) > Flashcards

Debt and Equity Finance (SGSs 8,9) Flashcards

1
Q

Shares in a limited company having a share capital must each have a fixed nominal value.

A

s.542(1) CA 2006

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2
Q

Shares in a company are taken to be allotted when a person acquires the unconditional right to be included in the company’s register of members

A

s.558 CA 2006

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3
Q

Full legal title to shares only achieved when person’s name is in company register

A

s.112(2) CA 2006

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4
Q

Treasury shares

A

Shares brought back by company and held ‘in treasury’ – can then be sold out of treasury

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5
Q

4 questions to be asked when allotting new shares

A
  1. Is there are cap/ceiling on the number of shares that can be issued (in the Articles)?
  2. Do directors need authority to allot?
  3. Must pre-emption rights be disapplied on allotment?
  4. Must new class rights be created for shares?
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6
Q

Since CA 2006, share capital increases automatically when shares are issued

A

s.617(2)(a) CA 2006

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7
Q

Companies incorporated under CA85 have authorised share capital (ASC) as their ceiling

A

CA85 company must remove ceiling by removing from Articles (can be done by OR)

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8
Q

Directors must not exercise the power of the company to allot shares unless in accordance with s.550 or s.551

A

s.549(1) CA 2006

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9
Q

Where a private company has only one class of shares, the directors may exercise any power of the company to allot new shares

A

s.550(a) CA 2006

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10
Q

The directors of a company may exercise a power of the company to allot new shares if they are authorised to do so by the company articles or by resolution of the Company

A

s.551(1) CA 2006

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11
Q

Authority to allot shares can be done by OR, unless Articles state a higher majority is required

A

s.281(3) CA 2006

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12
Q

Authorisation to allot shares under s.551(1) must state maximum amount of shares that may be allotted and specify the date in which it will expire (which must be less than 5 years from incorporation/resolution)

A

s.551(3) CA 2006

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13
Q

Pre-emption rights

A

Right of first refusal. New shares are offered to existing shareholders first.

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14
Q

Equity Securities are

A

Shares where there is no capped specified right to dividends or capital

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15
Q

Due to the fact that new shares dilute ownership, voting rights and dividends, equity securities cannot be allotted without first being offered to existing ordinary shareholders

A

s.561(1) CA 2006

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16
Q

General disapplication of pre-emption rights where SH authorise allotment of shares

A

s.570 CA 2006

17
Q

Specific disapplication of pre-emption rights by SR

A

s.571 CA 2006

18
Q

Private companies can exclude pre-emption rights from their articles (although this is unlikely as it removes protection)

A

s.567 CA 2006

19
Q

Disapplication of pre-emption rights for private companies with only one class of shares

A

s.569 CA 2006

20
Q

Company can create new class of shares and insert the rights associated to that class in the Articles

A

s.21(1) CA 2006

21
Q

Shareholders are free to transfer shares, subject to provisions in the articles

A

s.554(1) CA 2006

22
Q

PMM for removing share issue cap

A
  1. File new articles – s.26(1)
  2. File resolution SR – s.29(1)(a) and s.30(1)
  3. For CA85 file OR to remove camp
23
Q

PMM for granting authority to allot under s.551

A
  1. File OR granting directors authority to allot shares at CH within 15 days – s.551(a), s.29(1)(e), s.30(1)
24
Q

PMM for disapplying pre-emption rights

A
  1. File SR disapplying pre-emption rights at CH within 15 days – s.29(1)(a), s.30(1)
  2. File amended Articles within 15 days – s.26(1)
25
Q

PMM for creating new class of shares

A
  1. File SR amending Articles within 15 days – s.30(1)

2. File amended articles within 15 days – s.26(1)

26
Q

PMM for allotment of shares by BR

A
  1. File NM01 at CH within 1 month of allotment – s.555(2)
  2. File statement of capital – s.555(3)(b)
  3. Update register of members – s.112 and s.113 – within 2 months – s.554
  4. Sends share certificate to new members – s.769
27
Q

Private companies are limited from offering shares to the public

A

s.775 CA 2006

28
Q

Share premiums must be shown in a separate share premium account in a balance sheet

A

s.610(1) CA 2006

29
Q

A charge/security needs to be registered within 21 days

A

s.859(2) CA 2006

BLP (8 decks)

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