Equity and debt finance Flashcards
When are shares issued?
When the shareholder’s name is entered on the register of members
When do directors have the authority to allot shares?
If it’s a private company with 1 class of shares before and after allotment
If the company was incorporated after October 2009, an ordinary resolution is needed to activate this
Generally, what authorisation is needed to allot shares?
Ordinary resolution (unless private company with 1 class of shares)
What are preemption rights?
The right of first refusal over shares being alloted
When do preemption rights NOT apply?
- allotment of bonus shares
- wholly/partly non-cash consideration,
- if shares allotted under employee share scheme
Are there preemption rights in the model articles?
No
How can preemption rights generally be disapplied?
By special resolution
What’s needed to disapply preemption rights if directors were authorised related to a specific allotment?
Special resolution + directors’ written statement recommending the special resolution
Deadline for issuing share certificates
2 months from allotment
Resolutions to sent to CH within 15 days of allotment
- any special resolutions
- ordinary resolutions giving directors the authority to allot
Can the board refuse to register a transfer of shares?
Yes
What is the rate of stamp duty on the transfer of shares?
If value is over 1,000, it’s 0.5%, rounded up to nearest 5 Pounds
Deadline for entering the new shareholder on the register of members
2 months
What are the exceptions to maintenance of capital?
- share buyback,
- share buyback under s.994 unfair prejudice,
- returning capital on winding up
What resolution is needed to authorise a share buyback, and a share buyback out of capital?
Buyback: ordinary resolution
Buyback out of capital: ordinary and special resolution
When must the return of buyback and notice of cancellation of shares be filed?
Within 28 days of completion
When must the directors make a statement of solvency for a share buyback out of capital?
Maximum 7 days before the GM/written resolutions authorising the buyback
How and when must a share buyback out of capital be advertised?
Notice in London Gazette and appropriate national newspaper/notify all creditors
Do this within 7 days of the special resolution
Process for paying a dividend
Directors recommend the dividend and its size, and shareholders “declare it” via ordinary resolution
What is a debenture?
Written loan agreement registered at CH, giving the lender security over the borrower’s assets
Who can grant floating charges?
Companies and LLPs
What is the effect of a mortgage (except in land)?
It grants the lender legal ownership of the asset- its transferred back to the borrower on repayment
When must a charge be registered?
Within 21 days of creation
What is the consequence of failure to register a charge?
It’s void- the debt is still repayable, but the security can’t be enforced
What is the priority order of charges?
- fixed charge
- floating charge
If 2/more same charges, priority depends on date of creation, not registration!
What is a negative pledge?
A prohibition on creating later charges with priority without the lender’s permission (used in floating charges)
How can a company execute a deed?
- 2 authorised signatories, or
- 1 authorised signatory in presence of witness who attests it
What do the final accounts consist of?
- profit and loss account
- balance sheet
Which reports does the CA require companies to make?
- strategic report (except small companies)
- director’s report
- auditor’s report?