Part 4 Flashcards
What is meant by a “mandatory offer”
A Mandatory offer is part of a Takeover, if a shareholder on their own or acting in concert holds 30% or more of the shares of a public company they must make a mandatory offer to take over the company, they must offer to pay the highest price they’ve paid for the shares in the past 12 months.
What is meant by a “squeeze out”
Squeeze out rights are when an offeror can force an offeree to sell their shares to them. The offeror must own 90% or be about to own 90% of the shares/voting rights in the company, this is common when the offeror wants the wholly own the company as a subsidiary.
What is meant by “sell out” in the context of takeovers?
Sell out rights are when an offeree of a company can force the offeror to buy their shares so they can exit the company. The shareholder must have not accepted the takeover offer and the offeror must now own or be about to own at least 90% of the shares/voting rights in the offerees company
What are the three ways to appoint an administrator?
- The company itself – Members passing an ordinary resolution unless restricted by its articles or a majority of the Directors.
- Qualifying floating Charge holder – If the instrument that created the charge states para 14 IA1986 and they cover or substantially cover whole of the company’s property.
- Court Order – The Company, the directors, two or more creditors, the supervisor of a CVA, the liquidator and the FCA can all man an application to the court.
State two differences between a member’s winding up and a creditor’s winding up.
A member’s winding up is only available to solvent companies whereas a creditor’s winding up is available to solvent and insolvent companies. That in order to be a member’s winding up the directors must make a declaration of solvency stating that the company can cover its debts.
State two situations when a company is considered unable to pay its debts according to s.123 Insolvency Act 1986.
When a creditor is owed £750 or more and the money has not been paid as requested by statutory demand from the creditor within the 3 weeks. If a judgement has been executed against the company in the UK and the company fails to satisfy that judgement.
List four powers an administrator can exercise without the permission of the court or the creditors.
- Appoint agents and appoint and dismiss employees 2. Present or defend a petition for winding up the company 3. Take possession of, collect and get in the property of the company 4. Sell or otherwise dispose of the property of the company
What is a transaction at an “undervalue” according to s. 238 Insolvency Act 1986?
Where the company has at the relevant time, entered into a transaction at an undervalue such as: • The company makes a gift or enters into a transaction for no consideration • The company enters into a transaction with a person for a consideration which is significantly less than the value of the transaction. Within a relevant time this being 2 years
Give two situations when the liquidator can avoid a floating charge according to s.245 Insolvency Act 1986.
- If a charge was created in favour of a person connected with the company within a period of 2 years up to insolvency of the company. 2. A charge which was created in favour of any other person within a period of 12 months ending on the date of the onset of insolvency
What is a prohibited name under s. 216 IA with regard to the restricted re-use of a company’s name?
A name by which the liquidating company was known at anytime in the 12 month period prior to liquidation or; A name which so similar to a name falling in the above that it suggests and association with that company.
What does “joint and several” liability mean?
Where two or more persons commit a legal wrong that can result in joint and several liability, then the victim of the wrong can sue any wrongdoer or all the wrongdoers for the loss sustained.
What are the 3 three stages of a scheme of arrangement
Stage one: Application to get summon meetings Stage two: Approval of the scheme Stage Three: Court Sanction
