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43 Cards in this Set
- Front
- Back
A share is |
a bundle of rights and duties |
|
The main rights which a share may give today are: |
> Right to attend meetings
vote on resolutions
receive dividends |
|
Capital |
is the company's funds available |
|
Different types of share capital are: |
Authorised share capital |
|
Companies may issue a number of |
Ordinary shares |
|
If the directors wish to raise capital |
redeemable preference shares. |
|
As evidence that a shareholder has a certain number of shares in the company, |
they will be issued with a share certificate. |
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The rights which attach to shares are known as |
class rights. |
|
The first shareholders will be |
the subscribers of the |
|
Subsequent shares may be issued by the |
1. By the Articles of Association |
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Irrespective of the method used to issue shares, the authority only lasts |
5 years, |
|
In order to obtain a listing on the London Stock Exchange (known as a |
'flotation'), a company must be registered as a public company or have re-registered as such. |
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The listing of securities is governed by |
the Financial Services and Markets Act 2000 |
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The different methods of raising capital are: |
Prospectus (published containing all info for investors to make an informed choice and respond to, applying to purchase shares) |
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Each share must have a 'nominal' or 'par' value; usually of a small amount say $1. |
it represents the minimum amount |
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A public company normally |
at least one-quarter of its nominal value |
|
A private company need not demand any |
at least the nominal value |
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So long as the Articles |
increase its authorised share capital |
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By s.135, |
the company's Articles must so permit. |
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The capital maintenance rule |
> Shares must not be issued at a discount, |
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There are exceptions to the general |
A company can forfeit or surrender its shares |
|
If the Articles so permit, |
1. extinguish or reduce liability for share capital not fully paid up. |
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Although there is a basic prohibition on |
the company's main purpose in giving help |
|
In almost all of the situations where a company can validly acquire its own shares, |
it must then go on to cancel or dispose of them. |
|
If a company needs to raise more cash, |
Retain profits |
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A debenture is simply |
a document creating or evidencing |
|
Types of debenture include |
unsecured and secured. |
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A fixed charge has two elements: |
It is a charge over |
|
The main advantage of a fixed charge is that |
in the event of the company becoming insolvent, the holder of the charge has priority |
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The three common characteristics of a |
1. It is a charge over a class of assets of a |
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The detailed provisions in the Companies Acts require registers of charges on the |
- protect purchasers of the property charged; |
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Elements of registration include the following: |
Registration with the company itself |
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Fixed charges generally have |
in a winding-up, |
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Holders of floating charges can be protected to some extent by |
the terms of issue of their security |
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Debentures can take many forms. |
a loan agreement with its bank. |
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Debentures are often long-term, |
'perpetual', in that the company is |
|
When debentures are issued |
issued under a trust deed. |
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The following are some |
A shareholder is a member of the company and can normally therefore |
|
Ordinary shares |
Usually carry the right to vote |
|
Preference shares |
holders have the right to receive dividends |
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Deferred (shares) |
Holders are normally not entitled to any |
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Redeemable (shares)
|
As a general rule, a share, once issued by the company and paid for by the shareholder, remains in existence until the company is wound up. The holder of that share can sell it to another holder but the share itself must continue to exist. It is part of the share capital of the company and there have been stringent rules which control the power of a company to reduce its share capital.
In more recent times, these rules have been somewhat relaxed. One such relaxation is that it is possible to issue shares which are stated at the time of issue to be 'redeemable'. These can later be redeemed—bought back by the company—in accordance with the terms of issue. |
|
Treasury (shares) |
These shares were introduced on 1 December, 2003 |