lecture 3 Flashcards
(14 cards)
What are the ‘‘articles of association’’ of a company?
articles of association are the ‘constitution’ of a company and set out all the rules and internal workings of a company.
What is the difference between ordinary and preference shares?
Ordinary shares are the most common type of shares, the shares represent the share in the company, and they recieve share of company’s profit as dividend. It gives shareholders right to vote.
What are ‘pre-emption’ rights?
Pre-emption rights allow existing shareholders the first chance to buy new shares in proportion to their current ownership when a company issues new shares before the company can offer them to 3rd parties.
Can a decision of a company be challenged by a shareholder?
- yes, when it is against the best interest of the company, against the AoA, or if something is done unfairly (SUCH AS ISSUING NEW SHARES)
What is the right of preference?
- private limited company
- When shareholders want to sell shares they must first offer it to existing shareholders.
- shares can be sold to 3rd party after 3 months if (not all) shares are sold to existing shareholders.
How to determine the price that shares are being sold at, when you sell share in a private limited company.
-look at AoA
-no price?
- shareholders negotiate or use independent valuation.
what is the difference between Stock exchange and OTC trading?
Stock exchange- Centralized an regulated place where stocks are traded.
OTC trading- decentralized and less formal, more flexibility and risk
What is the share capital?
all the funds together from the shareholders.
What is the difference between nominee shareholders and beneficial shareholders?
-Beneficial shareholders are the actual owner of the share, and **Nominee shareholders **are the ones who hold the shares on behalf of the owner, but is not an owner. (legal owners)
-main concern in conducting strategic votes– making sure vote aligns with beneficial shareholder.
What types of rights do shareholders have?
- Voting rights
-allow shareholders to vote in proportion to their share of the capital.
-exception- preference shares - Right to dividends
-Shareholders entitlement to portion of company’s profits.
-typically paid from company’s profits
What is incorporation?
- Incorporation is the broad term to describe a business registered with a state to become a separate legal entity.
- If the certificate states that the company was incorporated on the 18th of March, from that day
forward, the company exists as a new legal person.- Prior to this date, any business activity was conducted in one’s personal capacity.
What are the functions of shareholders?
- INITIAL STAGE
* Contribute share capital to company, start company. - ESTABLISHED STAGE
* run company, participate in decision making, voting in shareholders resolutions - END STAGE
* liquidating company, has right to residuary
What is the Annual General Meeting?
- meeting once a year (enforced by law)
- meeting with BoD and shareholders.
- BoD delivers speeches.
- mainly discusses FINANCIALS.
How is there being voted at a General Shareholders meeting
-By a show of hands for non-contentious issues.
- By poll voting (typically 1 vote per share) for contentious issues.
- 50 percent majority needed to pass it for ordinary resolution
- 75 percent majority for special resolution
