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Maintenance of Capital (rules for maintenance of capital (reality (rules…

- - - - primary - the company sells
      - secondary - the owners of the shares sells
    - - methods
        
        sale by tender - highest bidder
        
        rights issue - existing shareholders
        
        placing - offer for sale to clients - done in blocks - fixed price
        
        offer for sale to public - fixed price
      - PLCs only - public companies
- - - - listing particulars must be published
      - further information published on regular basis
      - stringent conditions must be met before admission to listing
- - - - reduction may be necessary because company is over capitalised
      - take number of forms
        
        return to shareholders - taking up all the profits
        
        paying back paid up shareholders and cancelling shares
        
        reducing or extinguish uncalled liability
        
        writing off in the books cancelling any paid up capital which is lost or unrepresented by assets
      - s84 allowed two ways
        
        Summary Approval Procedure
        
        appropriate declaration by directors
        
        special resolution
        
        filing with the registrar
        
        special time limits unless 90% or more agree
        
        pass special resolution which is approved by court
        
        court concerned if reduction is fair and equitable to all shareholders
        
        Re John Power & Sons - majority must use powers in bona fide manner - reduction must be reasonable
  - - - assistance approved using summary approval procedure
      - payment of divdiends out of profits
      - discharge of lawfully incurred liability
      - lending in ordinary course
      - enable employees to buy shares
    - - other party must have had notice of faces - didn't hae to know it was a breach
      - actual notice required
      - transaction voidable
      - common law
        
        directors, company solicitors and advisors may be sued
        
        may give rise to action against company solicitors and advisors
  - - - avoid return of capital to members
      - accumulated profits less accumulated losses
      - Dividends form of distribution
      - once declared - a debt like any other
  - - - 102
        
        may buy back shares only in accordance with s102
        
        exceptions
        
        acquisition for other then valuable consideration
        
        cancellation in accordance with procedures in act s84
        
        purchase under court order in cases of oppression among s212
        
        redemption of redeemable purchase shares in accordance with the acts
        
        purchase in a merger or division in accordance of the Act
      - PLCs must observe additional requirement depending on whther the purchase takes place off-market or on a market
      - Requirements in relation to purchase
        
        redemption rules
        
        redemption may only be made out of profits for distribution
        
        if shares are to be cancelled they can be redeemed out of the proceeds of a fresh issue made for the purposes of redemption which must be paid out of the profits available for distribution
        
        Redeemable Shares
        
        2014 acts requirement that at least 10% of issued capital is non-redeemable
        
        Treasury shares - s109 - shares can be held as treasury shares - no voting rights, dividends or toehr payments can be exercised by the company in respect of shares held