Company Finance Flashcards
(23 cards)
What is allotment of shares ?
Creates shares and gives them out
What is transfer of shares ?
Existing shares sold to another shareholder
What is buyback of shares ?
Buys its own shares back from shareholders
Three questions to consider with allotment of shares ?
- are there constitutional restrictions ?
- do directors have authority to allot shares ?
- are there any pre-emotive rights ?
What happens in allotment of shares if model articles haven’t been updated since 2009 ?
They will need to pass an ordinary resolution to remove Authorised allotment of share capital
Under allotment of shares do directors have authority to allot ?
If it is one class of shares then they can
If it will create multiple must obtain ordinary resolution from shareholders
What if pre-emotive rights apply in allotment of shares ?
Then they can remove these via a special resolution
What are requirements for regular buyback ?
- Articles mustn’t forbid it
- shares must be fully paid
- ordinary try resolution
What are requirements for buybacks out of capital ?
- statement of solvency
- statement of auditors confirming reasonable
- special resolution
What are dividends paid out of ?
Paid out of profits of that year or previous but not out of capital
What is the order in priority of charges ?
1) Mortgages
2) fixed charge
3) floating charge
What is a mortgage ?
Highest form of security involves legal transfer of ownership to mortgagee
What is a fixed charge ?
Fixed charge on part or whole of an asset. First fixed charge registered takes priority
What is a floating charge ?
Equitable charge over the whole or a class of the company - assets constantly changing
What is a negative pledge ?
Prohibits company from creating a later charge that takes priority over floating charge
What does it mean if the charge is not registered ?
That charge is void against the liquidator or administrator of the company
What is the procedure for registering charge ?
Within 21 days of charge must be filed at companies house (court can extend this position)
What date are the charges judged from when determining priority ?
Date the charge was created if correct registering formalities are followed
What is a revolving credit facility ?
Allows company to draw and repay funds flexibly
When is a term loan from a bank useful ?
Loan is repayable according to agreed repayment schedule,
What is a debenture ?
Loan agreement between borrower and lender - gives security over borrowers assets, only LLPs and companies can enter these
When would pre-emptive rights need to be changed ?
If standard rights in s 561 companies act have not been disapplied
How to calculate dividend payout ?
6% - 6% of £1 shares x number of shares
