The Procedure for Allotment of Shares Flashcards
Which type of company automatically has no cap on the number of shares it may issue?
A. A private company incorporated under the Companies Act 2006
B. A company with a special resolution removing the cap
C. A public company incorporated under CA 1985
D. A private company with Model Articles pre-2006
A. A private company incorporated under the Companies Act 2006
Explanation: Under CA 2006, companies are not required to have an authorised share capital unless they choose to include it in their Articles.
When do directors have automatic authority to allot shares under s 550 CA 2006?
A. In a public company
B. In a private company with one class of share
C. In any company if allowed by the Articles
D. When the board passes a resolution
B. In a private company with one class of share
Explanation: s 550 CA 2006 gives private companies with a single class of share automatic authority to allot shares, unless restricted by the Articles.
A company plans to issue shares that entitle holders to a 5 percent dividend and to uncapped surplus capital. Do pre-emption rights apply?
A. No, because the dividend is capped
B. No, because the shares are preference shares
C. Yes, because the capital right is uncapped
D. Yes, but only if the Articles include them
C. Yes, because the capital right is uncapped
Explanation: If either dividend or capital rights are uncapped, the shares are equity securities, triggering statutory pre-emption rights under s 561 CA 2006.
What type of resolution is required to disapply pre-emption rights under s 570 CA 2006?
A. Board resolution
B. Ordinary resolution
C. Written shareholder consent
D. Special resolution
D. Special resolution
Explanation: A special resolution is needed to disapply pre-emption rights under s 570, usually linked to a general authority to allot under s 551.
A company is issuing a new class of preference shares with special rights. What must it do?
A. File Form SH01 only
B. Pass an ordinary resolution
C. Amend the Articles by special resolution
D. Notify Companies House within one month
C. Amend the Articles by special resolution
Explanation: Creating a new class of share means new class rights, so the Articles must be amended by special resolution under s 21 CA 2006.
Which of the following allows a private company with one class of shares to disapply pre-emption rights?
A. Special resolution under s 569 CA 2006
B. Board resolution
C. Automatic disapplication in all private companies
D. Unanimous shareholder consent
A. Special resolution under s 569 CA 2006
Explanation: s 569 allows private companies with only one class of share to disapply pre-emption rights by special resolution.
What must directors always do when shares are being issued, regardless of other steps?
A. Pass a board resolution to allot the shares
B. Get written shareholder consent
C. Amend the Articles
D. File Form SH01 first
A. Pass a board resolution to allot the shares
Explanation: The board resolution to allot shares is always required. It is the final approval for issuing shares.
When does legal title to shares transfer to the new shareholder after an allotment?
A. On signing the stock transfer form
B. When stamp duty is paid
C. On entry into the company’s register of members
D. On receipt of the share certificate
C. On entry into the company’s register of members
Explanation: Legal ownership of shares passes when the new shareholder is entered into the register of members, under s 112 CA 2006.
When must a company file Form SH01 with Companies House?
A. Within 7 days of share allotment
B. Within 1 month of share allotment
C. Within 15 days of the board resolution
D. Only at the end of the financial year
B. Within 1 month of share allotment
Explanation: s 555 CA 2006 requires Form SH01 to be filed within 1 month after shares are allotted.
When is stamp duty not payable on a transfer of shares?
A. If the consideration is £1,000 or less
B. If the shares are gifted
C. If the transfer is between group companies
D. If the shares are issued by the company
D. If the shares are issued by the company
Explanation: Stamp duty applies to transfers of shares, not issues. Allotment (issuing new shares) does not attract stamp duty.
