The case study in question is associated with the area of Company Law. Company Law is concerned with the regulation of powers, rights, duties and liabilities of the company and constituencies that are closely linked to the company . Company Law incorporates the Companies Act 2006, which regulates the relationship between the company and its managers. The company is a separate legal entity, through the Articles of Association the powers of a company are designated and exercised by the board of directors on behalf of the company. In relation to this we must examine the specific areas of the authority for allotment of shares, grounds on which there may be objections and the procedure of the transfer of shares. Once each area has been fully scrutinized a conclusion can be determined on the legal situation. Allotment of Shares Shares within a company may be acquired by original acquisition . This is when new shares are issued to existing shareholders or third parties making them shareholders and members of the company. In reference to the Companies Act 2006, sections 549-551, regulates how the share capital of a company and the issue of new shares are to be dealt with. If a company were looking to expand, a method of injecting capital into a company would be by the allotment of shares. Every share must have a fixed nominal price; in S.542 (2) of the CA 2006 it is illustrated that if an allotment of shares does not have a fixed price then it will be invalid . If a company was registered under the Companies Act 1985 (or earlier), it will have an authorised capital figure in its memorandum of association. This is the maximum number of shares the company can allocate . If the intended allotment was to exceed the amount of authorised... ... middle of paper ... ..., the transferee would have been fully aware of the existence the pre-emption rights. In the case of a courts view it may be held that a fraudulent agreement had taken place as they were aware of the existence of the pre-emption rights agreement and that minority shareholders may have had the intention to invoke the these rights under section 561 of the CA 2006. If the allotment of shares were to take place Peter and Michael would object to this, as it would result in a dilution of their shares and render the shares less valuable. Finally in relation to Peter transferring his shares to Verity, as long as the proper procedure for the transfer of shares in performed in accordance with section 771 of the CA 2006, then once the share certificate has been produced to Verity and the updated shares are entered into the Register of Members then the transfer is fully legal.
R v International Stock Exchange of the UK and the Republic of Ireland Ltd, ex p Else (1982) Ltd and others [1993] 2 CMLR 677
Outstanding shares are all the stocks that are currently held by investors including the restricted shares that are owned by the organizations on the inside as...
For example if ABC Goods had 1 million shares and they all cost R10 their market cap would cost R10million that is basically the cost of the company and how much you can offer to buy the company and the shareholders should be okay with it and it can also refer to the total amount of the stock exchange
A rights issue is an issue of rights to purchase new shares, which are issued pro rata to the existing shareholders, Armitage (2007). Rights issues were the dominate form of seasoned equity offers for fund raising in the United Sates and the United Kingdom . However, there has been a swing to other forms of share issues. The US has shifted towards firm commitments, Eckbo and Masulis (1992). In this the underwriter guarantees the sale of the issued stock at the agreed-upon price. The shift in the US occurred in the 1960’s. In the UK there has been a move towards open offers. Open offers are similar to rights issues but investors are unable to sell the stocks that they purchase under the open offer to other parties. The change in the UK occurred much later than the US, with the shift occurring in the 1990’s.
Bibliography: Turnbull, S. (1997). Corporate governance: its scope, concerns and theories. Corporate Governance: An International Review, 5 (4), pp. 180--205.
According to Corporation Act 2001 s124(1), it illustrates that ‘’A company has the legal capacity and powers of an individual both in and outside the jurisdiction” . As it were, company as a legal individual must be freely with all its capital contribution shall embrace liability for its legal actions and obligations of the company’s shareholders is limited to its investment to the company. This ‘separate legal entity’ principle was established in the case of Salomon v Salomon & Co Ltd [1987] as company was held to have conducted the business as a legal person and separate from its members. It demonstrated that the debt of company is belonged to the company but not to the shareholders. Shareholders have only right to participate in managing but not in sharing the company property. Besides ,the Macaura v Northern Assurance Co Ltd [1925] demonstrates that the distinction between the shareholders and company assets. It means that even Mr Macaura owned almost all the shares in the company, he had no insurable interest in the company’s asset. The other recent case is the Lee v Lee’s Air Farming Ltd [1961] which illustrates that the distinct legal entities between employee ad director allows Mr.Lee function in dual capacities. It resulted that the corporation can contract with the controlling member of the corporation.
The market value is not affected by the firm’s capital structure, that’s what the M&M first proposition stated; in proposition one it is stated that under certain conditions the firm’s debt equity has got no effect on the firm’s market value. This approach is based on the below:
The unfair prejudice petition has always been regarded as the easier and more flexible option for minority shareholders’ protection compared to the statutory derivative action. The restrictive leave requirements under the statutory derivative claim where the concept of prima facie, good faith and ratification have been interpreted within the confines of the origins in the case of Foss v Harbottle do not add any appeal the statutory derivative claim. Further, the approach in relation to granting indemnity costs orders which is rather limited does not in any way encourage any potential claimant to pursue a derivative action. Recent cases which allows corporate relief to be obtained via unfair prejudice petition and even the possibility if recovering costs under and unfair prejudice petition has further relegated the significance of the derivative action.
Nottingham Trent University. (2013). Lecture 1 - An Introduction to Corporate Governance. Available: https://now.ntu.ac.uk/d2l/le/content/248250/viewContent/1053845/View. Last accessed 16th Dec 2013.
Given all the above, there are only two ways to provide ownership interests for these new employees; both methods involve diluting the percentage interest of the current shareholders, hopefully to generate the larger absolute value created by the incentive of broad ownership. The first method is to use newly issued shares of company stock either as a direct contribution medium or through additional leveraging to finance other corporate activities.
... (English) Companies Act 1985; subject to High Court of Justice in England and Wales and Corus' shareholders approvals being obtained.
There is unlimited space for growth in a public company due to the allowance of unlimited shares being sold allowing that money to be injected into a capital fund to help with the expansion and growth of the business.
Shareholder Agreements offers a mechanism to the founding members of a company to regulate (and sometimes restrict) the shares allotted to the stakeholders. Though the restrictive covenants do not carry much favour by courts unless they form part of the company’s bylaws, yet they offer a way in which owners of a company can invite and incentivize talent – all the while regulating the flow of actual stake. The policies of a company, and sometime even ownership, can be jeopardized in an unregulated scenario.
The enhancement of Rs.9 croreswill be solely used for the purpose of acquisition of paid stocks of the said unit. No assets and liabilities relating to the said unit will be taken over by PRIL.
[7] Cavendish Lawcards Series (2002) Company Law (3rd edn), p.15 [8] [1976] 3 All ER 462, CA. [9] Griffin, S. (1996) Company Law Fundamental Principles (2nd edn), p.19 [10] [1990] Ch 433. [11] Lecture notes [12] Lecture notes [13] [1939] 4 All ER 116.