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Ch 11: Share Capital (Shares (Ordinary (ordinary rights (right to vote in…
Ch 11: Share Capital
Shares
Ordinary
ordinary rights
right to vote in meetings
right to receive dividends
right to receive distribution of suplus capital upon winding up
Preference shares
Additional rights
Protection from variation/ cancellation of share rights
Part 2F.2
regulates the way share rights can be varied or cancelled
s246B (1)
- may be specified in constitution
s 246B (2)
- no constitution
Procedure
special resolution passed by co AND
special resolution passed by members of affected class
written consent of at least 75% of votes of affected class
s 246B (3)
members must be notified within 7 days of change
ASIC notified within 14 days of change
Remedies
s 1324
Statutory injunction
s 246D
- members with 10% of the votes of affected class can apply to court for variation to be set aside
s 232
- grounds of oppression (single member)
Capital reduction
Ch 2J
Purpose to maintain capital and protect the interests of shareholders and creditors
s 256B
authorises reduction if:
it is fair and reasonable to shareholders as a whole (price)
does not materially prejudice co to pay its creditors
approved by shareholders
s 256B(2) equal reduction
approval obtained through general meeting
Equal reduction if
ordinary shares only
in proportion to no they hold
terms of reduction are the same for each holder
selective reduction
approved in special resolution
resolution agreed to at a general meeting
Share buybacks allowed
minimum holding buy back
employee share scheme buy back
on market buy back
equal access buy back
selective buy back
Creditors
#
s 588G
insolvency provisions
Consequences for failure to comply with
Ch 2J
Consequences:
Statutory injunction under
s1324
Dishonesty - fine/ imprisonment
Insolvent trading for directors
Civil penalty