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BLP > SGS 8 > Flashcards

SGS 8 Flashcards

1
Q

What is the nominal/par value of a share?

A

The minimum subscription price

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2
Q

What is the issued share capital?

A

The amount of shares in issue at any time

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3
Q

Allotment of shares

A

s.558

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4
Q

What are the five steps for allotting shares?

A
  • Cap
  • authority to allot
  • disapply pre-emption rights
  • new class
  • board
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5
Q

Where do you check for share cap?

A

Company constitution

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6
Q

What do you do if there is a share cap?

A

Amend by special resolution

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7
Q

What do you need to remember about a 1985 Act company?

A

That they would have had an ASC in the memorandum (which goes into the articles)

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8
Q

How can a 1985 Act company get rid of the cap?

A
  • Special resolution to amend articles

- Ordinary resolution to remove cap

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9
Q

What is the cap in the model articles?

A

There isnt one

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10
Q

What do you need to do if there is a cap?

A

Check how many shares have already been issued

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11
Q

How do you check how many shares have already been issued?

A

Look at Confirmation Statement (which is annual) + SH01

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12
Q

When do you use s.550 and s.551?

A
  • 550 when there is only one type of share that has already been allotted
  • s551 is a more general power to allot
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13
Q

What do 06 Act companies have to do to rely on s550?

A

Nothing - they can rely on it by default unless they have put something in their articles

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14
Q

What do 85 Act companies have to do to rely on s550?

A

Must activate it using OR

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15
Q

What do you need to use s551 (for 06 and 85 act companies)

A
  • Ordinary resolution

- Change the articles (less common as gives lots of power)

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16
Q

What are pre-emption rights?

A

Current shareholder’s statutory rights of first refusal

17
Q

What are equity securities?

A

s560(1) - ordinary shares (not capped by capital AND dividend)

18
Q

What kind of shares have pre-emption rights?

A

Equity securities

19
Q

What purpose does the right of pre-emption serve?

A

It prevents shareholders having their shareholding diluted

20
Q

In what situation will pre-emption rights not cause a problem?

A

Where there is a wholly-owned subsidiary

21
Q

How do you disapply s561 pre-emption rights?

A

If using s550, then disapply using s569; if using s551, then disapply using s570

22
Q

What do you need to do if the company requires a new class of shares?

A

Amend the articles by special resolution (s21)

23
Q

Can shares be allotted after authority expires?

A

Yes, provided that the OR giving the authority to allot allows this. Will be in pursuance of an agreement made before the authority expires s551(7)

24
Q

What happens if shares are allotted without s551 security?

A

Under s549(6), an allotment will be valid and enforceable. However, any director who knowingly and wilfully contravenes s549 or permits/authorises contravention commits a criminal offence and is liable to a fine (s549(4) and (5))

25
Q

Non cash consideration

A

There is no need to disapply s561 if the allotment is being paid otherwise than in cash (s565)

26
Q

How do you revoke s551 authority? What if authority had been given in the articles?

A

By passing an ordinary resolution under s551(4)(b) - applies even if the authority had been given in the articles (SR normally required to amend articles)

27
Q

What are the PMMs for the board meeting to allot shares?

A
  • File SH01 (s555(2)) within one month of allotment
  • Statement of capital (s555(3))
  • Update register of members
  • Issue share certificates recording that you have issued additional shares
28
Q

What is a participating preference share?

A

Ordinary share

29
Q

What is a standard preference share?

A

Usually not ordinary but depends on rights

BLP (5 decks)

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