Equities

Question 1

What is a private limited company by capital?

Answer 1

-Investors all contribute a set amount of capital.
-No shareholders
-Liability limited to amount of capital contributed.

Question 2

What two documents need to be completed to incorporate a company?

Answer 2

-Articles of association
-Memorandum of association

Question 3

What are the five model articles of association?

Answer 3

• Defined terms and limited liability
• Directors
• Shares and distributions
• Decision-making by shareholders
• Administrative arrangements

Question 4

How often are directors required to submit themselves for re-election?

Answer 4

Every 3 years

Question 5

What are the minimum employees a company needs to have?

Answer 5

Two directors and a secretary

Question 6

What majority do special resolutions need to pass?

Answer 6

75%

Question 7

Which type of shares give the holder voting rights?

Answer 7

Ordinary

Question 8

Where an investor pay for just a proportion of a share, this is referred to as…

Answer 8

Partly paid shares

Question 9

Which type of shares rank highest in the event of liquidation?

Answer 9

Preference

Question 10

A convertible preference share costs 80p and the conversion ratio is 6:1. The ordinary share price is £4.20. What is the conversion premium/discount?

Answer 10

80p x 6 = £4.80
(£4.80/£4.20) - 1 = 14.29% premium