Shares Flashcards
What are shares?
A bundle of rights which set out the shareholder’s financial stake in the company
Shares represent property rights but do not entitle ownership of the company’s assets.
What is nominal or par value in share capital?
A fixed value assigned to shares, with common minimum subscription prices being 1p, 5p, or £1
Shares cannot be allotted at a discount.
What does premium mean in the context of shares?
Shares may be allotted for more than their nominal value
What are issued shares?
Amount of shares in issue at one time, known as issued share capital
What are allotted shares?
Shares for which a person acquires an unconditional right to be included in the register of members
What are called up/paid up shares?
Shares for which the full amount does not need to be paid immediately. The amount paid is known as paid up share capital, and the outstanding amount can be called at any time.
What are treasury shares?
Shares that have been bought back by the company and are held in treasury
What are Ordinary Shares?
Ordinary Shares provide the right to vote in General Meetings, an unrestricted right to dividends and surplus capital, and a right to capital if the company is wound out.
What are Preference Shares?
Preference Shares have the right to dividend at a predetermined rate, only paid when there are distributable profits, and are normally non-voting.
What are Cumulative Preference Shares?
Cumulative Preference Shares require that arrears of preference dividends not declared in earlier years must be paid as well as the current year’s dividends.
What are Non-Cumulative Preference Shares?
Non-Cumulative Preference Shares do not allow for accumulation of unpaid dividends.
What are Participating Preference Shares?
Participating Preference Shares allow shareholders to participate in dividends or capital on winding up in addition to the preference dividend.
What are Non-Participating Preference Shares?
Non-Participating Preference Shares only receive the preference dividend.
What are Deferred Shares?
Deferred Shares normally have a right to a dividend and/or return of capital only after the claims of preference and ordinary shareholders.
What are Redeemable Shares?
Redeemable Shares are temporary shares that can be brought back by the company.
What are Non-Voting Shares?
Non-Voting Shares are issued when a company seeks to restrict control.
What are Convertible Shares?
Convertible Shares may be converted to a different type of share in the issuing company according to a pre-arranged formula in the company’s articles.
What are Employees’ Shares?
Employees’ Shares are the same as ordinary shares but often have restricted transfer.
How can Class Rights be varied?
Class Rights can only be varied in accordance with articles or if 75% in value of the affected class consent in writing, or if a special resolution is passed at a separate meeting of the affected class.
What rights do dissenting members of a class of shares have?
Dissenting members of a class of shares have the right to challenge variation by applying to court, provided they hold at least 15% of the issued shares of that class and challenge within 21 days of the resolution.
What condition must be met for a company to pay dividends?
Only payable if a company has sufficient distributable profits
What are final dividends?
Recommended by directors and declared by company via OR following financial year end
What are interim dividends?
Articles give directors power to pay interim dividends if the company has sufficient distributable profits
No need for OR of shareholders
