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Capital events - Coggle Diagram
Capital events
Rights issue
Under a rights issue, the share offer is only being made to existing members and in proportion to their existing holdings
They might also be offered the opportunity to acquire additional shares in excess of their entitlement, representing entitlements not taken by other members of for larger companies the rights issue might be underwritten in which case excess applications are generally not accepted
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Takeover
The share registration work to issue the takeover offer documentation and receive acceptance is often undertaken by the share registrar acting for the offeror company rather than that of the target company
It is important that the share registrar for the target keeps the offeror's share registrar up to date with any changes to the share register of the target during the course of the takeover offer
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Scheme of arrangement
Implementing a scheme of arrangement is relatively straightforward and does not require the existing members to do anything other than vote in respect of the scheme proposals at the general meeting
Following approval of the scheme of arrangement, the following steps will be required
Members entitlements are calculated as at the record date and a schedule of entitlements forwarded to the company. In practice, this is usually undertaken in advance of the GM to facilitate the scheme of arrangement taking place at the COB on the day of the GM
The directors should hold a meeting to formally approve the issue of shares, the register of members should be updated, new share certificates issued and exiting share certificates reflecting the original holdings cancelled
Share offer
A general share offer is perhaps the simplest of capital events from the perspective of the share registrar and the following steps should be followed
As application forms are received, they should be checked to ensure they contain the details of the applicant for adding to the register of members at the conclusion of the offer and that the necessary payment or evidence of a bank transfer is attached. Care must be taken to ensure that the application is in the name of a registrarable person and that a trust or unincorporated company has not applied for shares
Schedules of valid applications with a running total of the number of shares and subscription monies should be kept
Applications from existing members should be identified so that any new shares being issued are added to their existing account rather than a duplicate account opened
At the closing date of the share offer, the share registrar should forward to the CS, company directors and relevant professional advisers details of the applications received
If the total number of shares applied for exceeds the total number of shares on offer the applications will need to be scaled back. Although the offer document may set out details of how any scale back will take place, this is often left to the directors discretion. The most common methods being
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All applications up to say 5,000 shares being accepted in full and any larger applications being scaled back
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Once the schedule of applications is settled the directors should hold. meeting to formally approve the issue of shares, the register of member should be updated and share certificates issued to the successful applications and refund cheques issued in respect of unsuccessful applicants or partial acceptances
During the planning and implementation of capital events or corporate actions the company's share registrar plays a crucial role in ensuring that the administrative tasks are completed accurately and on time