Chapter 16 Self-test Questions

. What is a company's authorized share capital?

The total nominal value of shares allotted by a company

The amount of share capital that a company has called for payment

The total nominal value of shares that a company may allot

The combined nominal value of share capital that has actually been paid

. The authorized minimum share capital of a public company is?

£25,000

£50,000

£75,000

£100,000

. Explain the distinction between the allotment and issuing of shares.

Shares are allotted when the person pays for the shares and are issued when that person's name is entered into the register of members in respect of those shares

Shares are allotted when a person's name is entered into the register of members in respect of those shares, and are issued once those shares re fully paid for

Shares are issued when a person acquires the unconditional right to have their name entered into the register of members in respect of the shares, whereas shares are issued when the person's name is entered into the register of members

Shares are allotted to a person when they apply to purchase shares in the company, and are issued once that person acquires legal title of the shares

. Regarding the power to allot shares, identify which of the following statements are false.

Where a private company has only one class of share, the directors are authorized to allot more shares of the same class

The directors of a public company may only allot shares if they are authorized to do so by the articles or a resolution of the company

Where the directors allot shares without authorization, they allotment will be void

Authorization to allot shares can only be granted for a maximum of three years

. Pre-emption rights will not apply in several situations. Which one of the following is not such a situation?

Where the shares to be allotted are not equity securities

Where the shares to be allotted are bonus shares

Where the shares to be allotted are paid up otherwise than in cash

Where the shares to be allotted are allotted pursuant to an employee share scheme

Where the total nominal value of the shares to be allotted does not exceed £10,000

. A share certificate provides conclusive evidence of title to shares.

True

False

. Regarding the payment for shares, which one of the following statements is true?

Companies cannot accept payment for shares in the form of services

A company cannot allot shares for at a discount

A public company cannot accept payment in the form of an undertaking that is to be take place more than five years after the allotment

Non-cash payment made to a public company must be independently valued

. Regarding share classes, identify which one of the following statements is false.

A company can issue multiple classes of share if its articles so authorize

A company can issue multiple classes of shares if its members so authorize

If a company only has one class of share, these will be known as 'ordinary shares'

Preference shares typically provide their holder with a predetermined fixed dividend that is payable before a dividend is paid to the ordinary shareholders

. Regarding the transfer of shares, identify which one of the following statements is untrue.

If a company refuses to register a transfer of shares, it must provide reasons for the refusal

The articles can empower the directors to refuse to register a transfer of shares

Pre-emption rights cannot apply to a transfer of shares

A company cannot transfer certificated shares unless a proper instrument of transfer has been delivered to it

. Which one of the following is not a transmission of shares?

Where a shareholder dies and his shares are passed to another person

Where a shareholder is declared bankrupt and his trustee in bankruptcy deals with those shares

Where a shareholder sells his shares to another person

Where a shareholder becomes a patient under the Mental Health Act 1983 and his shares fall under the control of a receiver

Quiz Content