Shares Flashcards
What is share capital
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
Outline authorised share capital
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)
Outline issued share capital
Nominal value of shares distributed to members
Outline called up share capital
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
Outline paid up share capital
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
Outline par value companies & no par value companies
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
What are shares
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
Outline ordinary &
preference shares
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
Outline redeemable shares
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
Outline bearer shares
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
Outline transferability of shares
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
Outline how shares are evidenced
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
Outline dividends & share allotments
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