Shares Flashcards

1
Q

What is share capital

A

Money provided by members In return for shares In the company

Person who owns shares owns a part of the capital of the company = shareholder

Ownership entities shareholder to certain rights & imposes obligations upon them/ extent to which are set out in the articles or legislation

Types;

  • authorised
  • issued
  • called up
  • paid up
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2
Q

Outline authorised share capital

A

Max amount of share capital directors authorised to issue by memorandum

Expressed in terms of nominal value (par value) that represents face value of each share & is amount of funds required by shareholder to contribute to assets

Nominal value don’t give true indication of how much shareholders pay for shares (issued at premium) or what shares are worth (market value fluctuate)

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3
Q

Outline issued share capital

A

Nominal value of shares distributed to members

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4
Q

Outline called up share capital

A

Value of issued shares remain unpaid & whose holders been called upon to pay their shares

Company requests payment

CA06 states

  • aggregate amount calls made on its shares
  • any share capital paid without being called
  • any share capital paid up on a specific date
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5
Q

Outline paid up share capital

A

Amount issued share capital of company which paid for

Uncalled capital is amount share capital members haven’t paid , max amount required to contribute to liquidation of company

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6
Q

Outline par value companies & no par value companies

A

PAR VALUE
-company registered with share capital & shares expressed as having nominal value

NO PAR VALUE
-company formed with shares not expressed as having nominal value

Characterises;

  • memorandum states it’s no par value
  • shares not denominated in any currency
  • unlimited number of authorised shares
  • may have guarantor
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7
Q

What are shares

A

Different types of shares issued have different rights & obligations attached to them

Types of shares = classes of shares / have different rights in relation to voting, return of capital & deceive dividends

Types;

  • ordinary
  • preference
  • redeemable
  • bearer
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8
Q

Outline ordinary &

preference shares

A

ORD
-share of Equity ownership in company / entitles holder to vote at GM & receive dividends out of distributed profits

PREFS
-shares give rights to receive dividends of fixed % of distributed profits (priority)

  • winding up right (paid before ords)
  • no voting rights
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9
Q

Outline redeemable shares

A

Type of shares which can be repurchased by company at future date

Permitted in articles

Company must also have non-redeemable to ensure at least 1 member always remains

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10
Q

Outline bearer shares

A

Owned by bearer (whoever has them in their possession) / holds share cert

Cash = bearer instrument

*uncommon offshore as present high level of risk to SP / CDD rendered useless is shares change owner

  • JSY & Isle of Man permitted use
  • BVI and Cayman require shares logged with approved custodian
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11
Q

Outline transferability of shares

A

Members usually able to transfer shares freely / subject to articles

Pre emotion rights granted

Modern articles provide shares can be transferred by means of instrument lf transfer approved by directors / executed on behalf of transferor who remains holder until transferee name entered in RoM as holder

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12
Q

Outline how shares are evidenced

A

Share certificates
-CA06 states share cert issued under common seal of company is prima facie (on the face of it) evidence members title to shares

Modern articles provide company to issue each shareholder a certificate (free) is respect of shares held

Specifies; 
Number & class of shares 
Nominal value
Shares fully paid 
Name & address of holder
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13
Q

Outline dividends & share allotments

A

Dividends
-company has sufficient distributable profits may make dividend to shareholders / provide income

-must be actual profits not anticipated

Share allotments
-first shares usually issued to subscribers to company memorandum

-shares can be issued at nominal value or premium (difference in NV & price paid) / accredited to share premium account

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