Module 3

Question 1

What is a single debenture?

Answer 1

secured loan or overdraft from bank

Question 2

What are debentures issued in series?

Answer 2

diff lenders provide diff amounts on diff dates to the company. ranked equally - pari passu

Question 3

what is a registered debenture?

Answer 3

one which has its owner registered with the issuer. owners name and contact info is kept on file at the company

Question 4

what is a debenture stock?

Answer 4

issued by a PUBLIC company

Question 5

When should a company register debentures by?

Answer 5

Under CA 2006, by two months after allotment.

Question 6

What remedies are available for unsecured debenture holders?

Answer 6

• sue the company and/or seize assets
• petiton to the court to have the company wound up, needs to be owed more than £750, have written and 21 days passed
• administration order

Question 7

What remedies are available for secured debenture holders?

Answer 7

• take possession for fixed charge

- for floating, appoint administrator out of court

Question 8

What is a fixed charge?

Answer 8

attached to a specific asset.

Question 9

Who can create a fixed charge?

Answer 9

Anyone!!

Question 10

Where does a fixed charge rank in the event of liquidation?

Answer 10

FIRST

Question 11

What is a floating charge?

Answer 11

charge over class of assets of both present and future

Question 12

Who may grant a fixed charge?

Answer 12

only a company

Question 13

When would floating charges crystallise?

Answer 13

• liquidation

- events provided for under debenture

Question 14

When must be charges registered?

Answer 14

companies house within 21 days of creation

Question 15

What charges take priority?

Answer 15

fixed > subsequent fixed>floating

Question 16

What is a negative pledge clause?

Answer 16

can prohibit the creation of any subsequent charge relating to the same property with priority over the floating charge

Question 17

What are treasury shares?

Answer 17

companies own shares that they have bought back but not cancelled. These treasury shares can be reissued without going through the usual formalities.

Question 18

What can be done with treasury shares in the UK?

Answer 18

cancelled, sold, transferred to an employee share scheme,

Question 19

What other classes of shares are there?

Answer 19

Founders shares, rank after ordinary but have additional voting rights
management shares

Question 20

When may class rights be varied?

Answer 20

• in accordance with company’s articles

- if 75% of the that class consent

Question 21

How may shareholders object to variation of rights?

Answer 21

• must not hold less than 15%
• must not have voted for the variation
• must apply to court within 21 days of consent ebbing given

Question 22

Can companies allot more shares without consent?

Answer 22

Private with only one share class- YES
Public or private with multiple share classes - NO, unless given permission by ordinary resolution or the articles. Authority may not be given for a period more than 5 years. And there should be a max.

Question 23

When should directors register allotment\?

Answer 23

Within two months. Within one month they must make a return to the registrar with a statement of capital

Question 24

What are pre-emption rights?

Answer 24

statutory obligation to offer shares to existing shareholders to avoid dilution.