FORMING & FINANCING THE CORPORATION Flashcards

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1
Q

ways in which you can set up a public company (2)

A
  1. formation
  2. transformation of an existing legal entity
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2
Q

articles of incorporation/ instruments of constitution (6)

A
  1. name of the company + legal form
  2. objects of the company
  3. amount of subscribed capital
  4. amount of authorised capital
  5. rules of corporate governance
  6. duration of the company (unless indefinite)
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3
Q

articles of association /statutes

A
  1. registered office
  2. info regarding shares (must be written for every different classe of shares, common, preferred, …)
    - no. of shares subscribed (& nominal value if specified)
    - any special condition restricting transferability of shares
    - type of share (registered or bearer)
  3. amount of subscribed capital paid at incorporation
  4. nominal value of shares issued for consideration other than cash + type of consideration + name of contributor
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4
Q

4 substantive requirements to form a corporation

A
  1. public company can be formed for ANY purpose in accordance with the law by ONE or more persons acting as founders or subscribers
  2. capital requirements: at least €25,000, in some countries more
    !! at least 25% of shares issued for consideration must be paid at incorporation
  3. a minimum capital must be maintained during the lifetime of the company ( to absorb losses, not present in every country)
  4. shares may NOT be issued at a price < nominal value or accountable par
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5
Q

independent expert’s report must contain: (3)

A
  1. description of cash assets comprising the consideration
  2. description of methods of valuation
  3. state whether the values correspond at least to no. & nominal value of shares ad (if existing) to the premium
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6
Q

exceptions (independent expert’s report NOT needed)

A
  1. sh contribute transferable securities that are valued at the weighted avg price at which they have been traded
  2. assets are contributed not more than 3 months after they have been valued by a recognised & independent expert
  3. value of assets derived by statutory accounts of previous financial year
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7
Q

what is needed if a sh sells an asset to the company within 2 years from formation

A
  1. independent expert’s report
  2. acquisition must be approved by general sh meeting
  3. level of control = contribution other than cash
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8
Q

reasons why a company should acquire its own shares

A
  1. give them to employees
  2. use them for deals with other companies
  3. remunerate sh
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9
Q

conditions for the company to reacquire its own shares (other conditions may be added by Member States legislations)

A
  1. authorisation by general sh meeting
  2. net assets < subscribed capital + undistributable reserves
  3. only full paid shares may be included in the transaction
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10
Q

2 cases in which the general sh meeting may decide for a reduction of capital

A
  1. company has significantly reduced its activity
  2. company has suffered a serious loss (in Italy 1/3 of subs capital) & nominal capital must be made close to real one
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11
Q

what happens if sh NOT BUY new shares in case of an increase of capital

A
  1. voting rights are diluted (better for majority sh bc minority sh will have less power)
  2. BV of shares is lower
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12
Q

what happens if sh BUY new shares in case of an increase of capital

A
  1. same voting rights
  2. same BV
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