Shares Flashcards
Where are shares regulated in the Act?
(*ss 540-657 CA 2006)
What is a share?
See Borland’s Trustee v Steel Bros. & Co. Ltd. [1901] 1 Ch 279, at p 288 per Farwell J, who says that “a share” represents a shareholder’s “interest” in a company “measured by a sum of money” for “liability” purposes “and of interest”; it also involves “a series of mutual covenants” between shareholders.
i.e., it represents a shareholder’s stake in a company.
Shares are an interest in a company - normally represented by a monetary sum.
What do shares give you?
They give you:
⁃ 1) partial ownership of the company
⁃ 2) a right to obtain dividends
⁃ 3) a right to capital appreciation (i.e. increase in the value of the shares)
What are shares certificates?
Share Certificates – evidence of title? See s 768 CA 2006:
[see notes]
What are the types of shares?
Par (or Nominal) value – s 542 CA 2006
Partly-paid shares – s 547 CA 2006.
Uncalled capital - s 547 CA 2006
Calls - s 547 CA 2006
Voting and non-voting shares.
⁃ Some shares may have voting rights, others may only entitle you to a share in dividends.
“Class rights” – s 629ff CA 2006
⁃ Some shares may have more voting rights than others.
Preference shares
⁃ These are a type of share where you will get a priority in payment of dividends (you’ll get paid dividends first) - normally the sacrifice for this is that you don’t get voting rights.
Redeemable shares (company’s option or holder’s option.).
Dividends (“distributions”) – generally: see ss 829-831 CA 2006.
- Bushell v Faith [1970] AC 1099; [1970] 1 All ER 53
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Are shares Moveable or immoveable? Corporeal or incorporeal? Real or personal?
See s 541 CA 2006.
What is the requirement of an initial public offering of shares?
⁃ If a company decides to issue shares to the public then they must do an “IPO” (an initial public offering). These are regulated, at present, by the FCA (s 59 of FSMA 2000).
⁃ A prospectus is also required: see Part VI of Financial Services and Markets Act 2000 (ss 84-103). These are regulated, at present, by the FCA (s 59 of FSMA 2000). See the Prospectus Rules in the FCA Handbook (http://www.fca.org.uk/handbook )
When issuing new shares, these cannot be issued below the par value - they can be issued below the market price (s 552 CA 2006).
What is the acquisition of shares?
Original (ie, of shares newly issued by company – referred to as an allotment and issue), (par value) or
Derivative (ie, existing shares acquired from an existing shareholder – pay market price)
What is the requirement of no discount on shares?
Section 552 CA 2006
ie, not to be issued below par value
*Ss 549 – 616 CA 2006
by Rights issue or Bonus issue.
National Westminster Bank plc v Inland Revenue Commissioners [1995]
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What is the requirement of the allotment of shares?
Directors require the authority of the members to allot shares in certain circumstances. Rights of pre-emption of existing shareholders on allotment.
What are the restrictions on the transferability of shares?
Restrictions on transferability:
- Directors’ right to refuse to register the transfer of a share - Model Articles:
(i) Private Cos – Sch 1, Art *24(5); and
(ii) Public Cos – Sch 3, Arts 63(5) and (6) (public) & CA 2006, ss 770 – 771; and - Rights of Pre-emption on Transfer of shares in Articles of Association of private companies.
Nemo plus juris ad alium transferre potest quam ipse haberet.
Stock Transfer Act 1982; s 785 CA 2006 - Uncertificated Securities Regulations (2001 SI 2001/3755) (as amended) - CREST system.
What are the requirement of the accounts and auditing of shares?
Part 15 CA 2006 (see CA, s 386).
Detailed content of accounts and group accounts contained in CA 2006, Part 15, Ch 4.
Balance sheet of the partnership of Ulpiana & Gaius as at 1 October, 2014 [see notes]
