CFAB: COMPANY FINANCE

As a general rule, is a company able to allot shares: at a premium?

As a general rule, is a company able to allot shares: at discount?

• Yes

• No

• Yes

• No

Jill and Naomi plan to set up Indigo Ltd, a private company limited by shares. They have some concerns over the payment for shares and ask you whether the following are true:

-The shares taken by the company’s original subscribers must be paid for in cash.

-Any shares subsequently allotted must be paid up at least as to one-quarter of the nominal value together with the whole of any share premium payable in respect of them.

• True

• False

• True

• False

Anita wishes to purchase 100 shares with a nominal value of £1 each in Lovages plc. By way of payment for those shares, can she:

-agree to act as the company’s legal adviser for a period of three years?

-Can she: pay 20p per share now, with the remaining 80p per share to be paid at a later date?

• Yes

• No

• Yes

• No

In relation to the transfer of shares by electronic means: Requirements:

-Does the CREST transfer system operate in respect of all shares?

-Are companies obliged to permit paperless transfers of shares?

• Yes

• No

• Yes

• No

Unico Ltd is a private company limited by shares with 100 shares of 50p each and 100 shares of £1 each.

-Is Unico Ltd able to: subdivide each of its £1 shares into 10 10p shares?

-Is Unico Ltd able to: consolidate pairs of 50p shares into £1 shares?

• Yes

• No

• Yes

• No

In the absence of a court order that directs otherwise, in what circumstances must a public limited company re-register as a private company as a result of a reduction in its share capital?

• When the directors are unable to issue a solvency statement in respect of the company’s liabilities.

• When the company’s net assets fall below half of its called up share capital

• When 20% or more of the company’s creditors object to the reduction.

• When the nominal value of the allotted share capital falls below the authorised minimum

Zipper Ltd has 100 shares, each with a nominal value of £30 and £3 unpaid. Following an alteration of Zipper Ltd’s share capital, the company now has 10,000 shares, each with a nominal value of 30 pence with 27 pence paid up. Which of the following describes the alteration in share capital?

• Consolidation

• Subdivision

• Redenomination

• Increase in share capital

According to the rules on redemption of shares, are the following statements true or false?

-In order for a private limited company to issue redeemable shares, the company’s articles of association must contain the relevant authority.

-Redeemable shares may only be issued where there are other shares issued that are not redeemable.

• True

• False

• True

• False

Are the following statements true or false?

-When shares in a limited company are redeemed, they are treated as cancelled and the amount of the company’s issued share capital is diminished by the amount of the redemption payment.

-A company must file notice of redemption and a statement of capital with the Registrar of Companies within one month following a redemption of shares.

• True

• False

• True

• False

Rugs plc has recently purchased 500 of its own shares with funds which comprised part of the company’s distributable profits. The shares have been cancelled and the company’s issued share capital has reduced by £1,000, which amount has been transferred to the company’s capital redemption reserve. Are the following statements true or false?

-The capital redemption reserve of Rugs plc is treated as part of the company’s paid up share capital.

-The capital redemption reserve of Rugs plc may not be used to pay up new shares which are allotted to members as fully paid bonus shares.

• True

• False

• True

• False