Law- Ch-13

1. Which of the following statements is correct in relation to an issue of new shares?

(1) All new shares issued by a private company must be offered to the existing members first

(2) All shares issued for cash must be offered to the existing members first

• 1. 1 only

• 1. 2 only

• 1. Neither 1 nor 2

• 1. Both 1 and 2

2. 2. Which of the following statements about share capital is/are correct?

(1) Subscriber’s shares in a public company do not have to be paid in cash

(2) Neither a private company nor a public company may issue shares at a discount unless the balance remains payable by the shareholder

• 1. 1 only

• 1. 2 only

• 1. Both 1 and 2

• 1. Neither 1 nor 2

3. Which of the following is correct in relation to a company issuing shares?

• 1. Any limited company may issue shares by way of a public offer

• 1. The directors are responsible for alloting shares

• 1. The increase in authorised capital must be confirmed by the court

• None

4. The directors of Pen Co are proposing a capital reduction. They have made a statutory declaration and called a general meeting of members.

What kind of resolution is required to approve the capital reduction?

• 1. Ordinary resolution

• 1. Ordinary resolution with special notice

• 1. Extraordinary resolution

• 1. Special resolution

5. The members of RRR Co have been asked to delegate the right to allot a new class of shares to the directors.

What is the maximum period of time for which such a resolution may be effective?

• 1. One year

• 1. Five years

• 1. Ten years

• 1. Indefinitely

6. Simone is a member of YYY Co. She has received a letter from the company stating that the company is unable to pay a dividend this year, but the company will be issuing members with additional shares.

This is an example of which of the following?

• 1. A rights issue

• 1. Pre-emption rights

• 1. A bonus share issue

• 1. An issue of shares for zero consideration

Which of the following will give rise to a share premium?

• 1. Issuing shares at a discount

• 1. Issuing shares at nominal value for full consideration

• 1. Issuing shares at nominal value for part consideration

• 1. Issuing shares for more than the nominal value

For which of the following purposes may the share premium account be used?

• 1. To pay dividends on all classes of shares

• 1. To pay dividends to preference shareholders only

• 1. To issue bonus shares to existing members

• None

What is a “scrip issue”?

• 1. An issue of bonus shares

• 1. An issue of partly paid shares

• 1. An issue of shares for non-cash consideration

• None

Which of the following would be regarded as an issue of shares for an improper purpose?

(1) An issue of shares in return for a non-cash consideration

(2) An issue of shares to enable the directors to maintain control of the board

(3) An issue of shares to prevent a take-over bid

• 1. 1 and 2 only

• 1. 1 and 3 only

• 1. 2 and 3 only

• 1. 1, 2 and 3