Chapter 16 - Shares, share capital, share register and debt capital

Question 1

Which organisations have oversight of the UK financial services industry?

Answer 1

1. FCA
2. PRA
   3.The PRA (Prudential Regulation Authority)
3. The Treasury
4. Bank of England
5. Financial Policy Committee

Question 2

What is the name of the process through which the FCA supervises the employment of financial services professionals?

Answer 2

Senior Managers and Certification Regime

Question 3

What is the difference between allotted and issued share capital?

Answer 3

Allotted shares are those where the investor has acquired an irrevocable right to be registered as the holder of the shares. Issued shares are those entered in the register of members and for which a share certificate or CREST credit has been issued.

Question 4

What is the company’s equity share capital?

Answer 4

These are the ordinary voting share capital.

Question 5

Can shares be issued at a discount?

Answer 5

Yes - up to 10%

Question 6

If a call in shares is no paid, what is the ultimate sanction available to directors?

Answer 6

Forfeiture

Question 7

If directors have full authority to issue additional shares, what protection do existing members have from having their holding diluted?

Answer 7

Pre-emption rights on the allotment of new shares

Question 8

When payable, what is the rate of stamp suty?

Answer 8

0.5% of the value of consideration

Question 9

What comfort does certification of a stock transfer form give to the purchaser of the shares?

Answer 9

Confirms that the holder does hold sufficient shares to complete transfer and that the company, or share registrar, is holding the share certificate.

Question 10

How long do companies have in which to issue share certificates following a share issue or share transfer?

Answer 10

Two months

Question 11

Must shareholder addresses be shown on share certificates?

Answer 11

No

Question 12

Cash dividend payments must be funded from what reserve?

Answer 12

Distributable reserves.

Question 13

Scrip dividends and dividends reinvestments schemes exchange the cash dividend for what?

Answer 13

Fully paid shares

Question 14

Who are offered shares under a rights issue?

Answer 14

Existing members

Question 15

If a member transfers their shares during the course of a takeover, what should happen to the form of acceptance issued for those shares?

Answer 15

It should be forwarded on to the transferor or their broker

Question 16

Under which type of option scheme might an employee receive partnership shares?

Answer 16

Share incentive plan (SIP)

Question 17

What main benefit do unapproved share options not enjoy compared to approved option schemes?

Answer 17

Tax relief on issue of the options, on sale of the shares or both