Module 3 Flashcards
What is a single debenture?
secured loan or overdraft from bank
What are debentures issued in series?
diff lenders provide diff amounts on diff dates to the company. ranked equally - pari passu
what is a registered debenture?
one which has its owner registered with the issuer. owners name and contact info is kept on file at the company
what is a debenture stock?
issued by a PUBLIC company
When should a company register debentures by?
Under CA 2006, by two months after allotment.
What remedies are available for unsecured debenture holders?
- 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
What remedies are available for secured debenture holders?
- take possession for fixed charge
- for floating, appoint administrator out of court
What is a fixed charge?
attached to a specific asset.
Who can create a fixed charge?
Anyone!!
Where does a fixed charge rank in the event of liquidation?
FIRST
What is a floating charge?
charge over class of assets of both present and future
Who may grant a fixed charge?
only a company
When would floating charges crystallise?
- liquidation
- events provided for under debenture
When must be charges registered?
companies house within 21 days of creation
What charges take priority?
fixed > subsequent fixed>floating
What is a negative pledge clause?
can prohibit the creation of any subsequent charge relating to the same property with priority over the floating charge
What are treasury shares?
companies own shares that they have bought back but not cancelled. These treasury shares can be reissued without going through the usual formalities.
What can be done with treasury shares in the UK?
cancelled, sold, transferred to an employee share scheme,
What other classes of shares are there?
Founders shares, rank after ordinary but have additional voting rights
management shares
When may class rights be varied?
- in accordance with company’s articles
- if 75% of the that class consent
How may shareholders object to variation of rights?
- must not hold less than 15%
- must not have voted for the variation
- must apply to court within 21 days of consent ebbing given
Can companies allot more shares without consent?
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.
When should directors register allotment\?
Within two months. Within one month they must make a return to the registrar with a statement of capital
What are pre-emption rights?
statutory obligation to offer shares to existing shareholders to avoid dilution.
