SGS 8 Flashcards
(29 cards)
What is the nominal/par value of a share?
The minimum subscription price
What is the issued share capital?
The amount of shares in issue at any time
Allotment of shares
s.558
What are the five steps for allotting shares?
- Cap
- authority to allot
- disapply pre-emption rights
- new class
- board
Where do you check for share cap?
Company constitution
What do you do if there is a share cap?
Amend by special resolution
What do you need to remember about a 1985 Act company?
That they would have had an ASC in the memorandum (which goes into the articles)
How can a 1985 Act company get rid of the cap?
- Special resolution to amend articles
- Ordinary resolution to remove cap
What is the cap in the model articles?
There isnt one
What do you need to do if there is a cap?
Check how many shares have already been issued
How do you check how many shares have already been issued?
Look at Confirmation Statement (which is annual) + SH01
When do you use s.550 and s.551?
- 550 when there is only one type of share that has already been allotted
- s551 is a more general power to allot
What do 06 Act companies have to do to rely on s550?
Nothing - they can rely on it by default unless they have put something in their articles
What do 85 Act companies have to do to rely on s550?
Must activate it using OR
What do you need to use s551 (for 06 and 85 act companies)
- Ordinary resolution
- Change the articles (less common as gives lots of power)
What are pre-emption rights?
Current shareholder’s statutory rights of first refusal
What are equity securities?
s560(1) - ordinary shares (not capped by capital AND dividend)
What kind of shares have pre-emption rights?
Equity securities
What purpose does the right of pre-emption serve?
It prevents shareholders having their shareholding diluted
In what situation will pre-emption rights not cause a problem?
Where there is a wholly-owned subsidiary
How do you disapply s561 pre-emption rights?
If using s550, then disapply using s569; if using s551, then disapply using s570
What do you need to do if the company requires a new class of shares?
Amend the articles by special resolution (s21)
Can shares be allotted after authority expires?
Yes, provided that the OR giving the authority to allot allows this. Will be in pursuance of an agreement made before the authority expires s551(7)
What happens if shares are allotted without s551 security?
Under s549(6), an allotment will be valid and enforceable. However, any director who knowingly and wilfully contravenes s549 or permits/authorises contravention commits a criminal offence and is liable to a fine (s549(4) and (5))
