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C8: Shares - Coggle Diagram
C8: Shares
Shares
Rights & Powers (S.71)
- right to attend, participate & speak
- right to vote on show of hands
- right to vote for each share
- right to dividends BUT right to dividend is subject to Constitution
- right to equal share in distributions of surplus assets
PREFERENCE SHARES S.72
- co having a share capital may issue preference shares too
Preference shares:
- receive dividends FIRST before other
- the dividend is FIXED (so co has to periodically declare and pay them)
- NO voting rights, no say in electing directors
Directors- issue shares
- unless approval by members are obtained, director takde power untuk allot shares dalam co, to grant right to subscribe for shares (S.75(1))
Shares in priv co (not more than 50 SH)
- S.43: cannot invite/advertise to public to subscribe its shares
- but priv may transfer shares from member to a member of public
- can prohibit using restriction on transfer of shares by controlling who can be member of the co
- example: Bumiputra only
Consequences of inviting public:
- co lose benefits & status of private co
- for exempt private co, will have to lodge its audited accounts with CCM
- co cannot be re-converted into priv co except with approval from court
Shares in public co
- has prospectus which is a document contain relevant info to enable investors to make decision
- includes notice, circular, advertisement or invitation for subscription of shares
Shares need not have a standard price:
- co can issue shares at any price
- to determine the co's worth, net tangible assets will be looked
- NTA: physical asstes (-) liabilities - S.74 no par value shares
- creditors rely on co's business reputation, its net worth and cash flow
- how much each share is priced does not matter
Class of shares
Types of Shares S.69
- shares of diff class
- redeemable shares under S.72
- shares that carries preferential rights to distributions of income
- shares with special, limited voting right
- shares with no voting rights
How do we know shares are of which class?
- S.89(1) shares in the same class if the rights attached to the shares are identical
- S.90(1) co that has diff classess of shares shall, in its Constitution, state prominently:
a) co's shares are divided into different class b) voting rights attached to shares
Co has shares with no voting rights?
- S.90(2):
a) be described as "non-voting" b) ensure that those words appear legibly on any share certificate, prospectus or director's report issued by co
- S.90(3): preference shares are not the same as non-voting shares
Reasons for different class
- small, private. family companies
- to avoid dilution of voting powers of existing SH
- alternative to borrowing
- long term investment
Can modify the rights?
S.91(1)- rights of a class can be varied if:
- a) accordance with Constitution
- b) if no such provisions, with consent of SH (at least 75% SH)
What happens after variation?
1) - S.92 co give written notice to each SH of the class within 14 days from date
2) notify SSM/Registrar S.95(1)-within 30 days after variation
- a) send copy of resolution
- b) statement of capital
If fail to do so?
S.95(2) fine not exceed RM10,000 and RM500 each day Can SH disagree on variation?
YES, S.93(2) 10% SH may apply to court to have it disallowed (within 30 days after variation)
-
Dividends when co declared dividends, ordinary SH receive it & rate may fluctuate
Dividend for preference shares is fixed! the div payable to preference shares is payable to priority to ordinary shares
S.131 - S.133 to distribute div, co must:
- have profits & solvent
- solvent immediately after distribution is made- the test is ability to pay debts due within 12 months after date distribute
2) fulfil solvency test
S.132(3) must solvent & be able to pay
- directors must satisfied that their co fulfils the test
- if director authorizes payment in contravention; fine not exceed RM3M or imprisonment not exceed 5 years or both (S.132(5))
1) have profits & solvent
can co recover div from SH?
S.133(1) yes if the div exceed proper value, melainkan SH:
- a) receive div in good faith
- b) has no knowledge that co did not fulfil solvency test under S.132(3), NO recovery can be made