Equity Finance

Question 1

Board and shareholder resolutions to issue new shares

Answer 1

1. Ordinary resolution giving the board authority to allot (this does not apply if there is only one class of shares, and shares of that class are being issued)
2. Special resolution disapplying pre-emption rights (rights of first refusal, only applies to ‘equity securities’)
3. Special resolution to amend the articles (if new class of shares is being created)
4. Board resolution to allot the shares

Question 2

What are ‘equity securities’ under the CA 2006?

Answer 2

Shares other than those that carry capped rights to dividends and capital payments on a winding up

Question 3

What companies are prohibited from giving financial assistance?

Answer 3

If the target is a public company, prohibition applies to:
- Target company itself
- Any subsidiary of the target company, whether private or public

If the target is a private company, prohibition applies to:
- Any public subsidiary of the target company (not the private company itself)