Share Capital/Capital Maintenance

Advantages of alloting shares
1. pre emption rights maintain existing holders equity
2. Cheaper to service than loans
3. more flexible
4. able to design
Allotment
1. private company with 1 class
  1. directors have unlimited authority
    1. s549
2. authority for up to 5 years needed
  1. s551
3. consider pre-emption rights
  1. unless authority not to
    1. s569
4. must not be issued at a discount
  1. s552
5. Plc's cannot issue in transfer for services
  1. s585
6. non cash provisions
  1. s593-609
Transfers
1. normally to whomever the transferor wishes
2. directors
  1. register transfers
  2. tell members if not
    1. s777(1)
    2. if unjustified new member can apply for rectification of register
      1. s1225
3. Smith v Fawcett
  1. exercise good faith in transfer
4. Stamp Duty
  1. 0.5%
  2. minimum £500
Share Certificates
1. prima facie evidence of right
2. cannot deny rights not a holder
3. CREST
  1. nominees hold electronic form
Reduction of Capital
1. why?
  1. too much capital
  2. devaluation of assets
  3. may be able to pay dividends again
2. court application
  1. s641
  2. editors entitled to object
    1. s646
3. solvency statement
  1. signed by directors
    1. 642
    2. Not signed
      1. court procedure
        s641
    3. liable if no reasonable grounds
      1. s643(4)
4. shares do not exist
Re-Purchase
1. Why?
  1. to get rid of a member
  2. restore control
  3. increase asset value per share
  4. to deter takeover bid
  5. departing employee
  6. no other market for shares
2. method
  1. Off-Market
    1. s694-700
    2. Private companies
    3. off-market plcs
  2. Market
    1. s701
Financial Assistance
1. difficult unless benefits employees
2. Brady v Brady
  1. Lord Oliver
    1. requirment: best interests of the company
Dividends
1. only where accumulated realised profits > accumlated realised assets
  1. Revalution not realised as not sold
2. Plc?
  1. Net Asset Rule
    1. s831
    2. net assets > share capitcal
3. Bairstow v Queens Moat Houses
  1. liable for unjustified dividends
    1. s847
    2. member too if known
Insider Dealing
1. s52 Criminal Justice Act 1993
  1. exploits information for profit
2. defences
  1. not expected result
  2. information disclosed
  3. Information did not influence
Squeeze out provisions
1. min < 10% has to sell in takeover
  1. s974

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