Monday 5 February 2024
Dear Subscriber,
I hope you had a great weekend. Please see below for the question, the answer to the previous question and associated resources. This is the web version of this newsletter.
Question:
XYZ Ltd is a private limited company with multiple shareholders. The company’s articles of association state that any transfer of shares requires the approval of the existing shareholders. Jack, a shareholder of XYZ Ltd, wishes to transfer his shares to a third party without obtaining the approval of the existing shareholders. Which of the following statements best describes the situation?
- Jack can transfer his shares freely without obtaining approval from the existing shareholders.
- Jack can transfer his shares without approval if he notifies the company in writing within a specified time frame.
- Jack cannot transfer his shares without the approval of the existing shareholders as per the company’s articles of association.
- Jack can transfer his shares without approval if he sells them at a fair market value determined by an independent valuation.
- Jack can transfer his shares without approval if the company’s directors provide written consent.
Top Tip: To learn more about shares and shareholders listen to the podcast linked here.
Relevant Reading: For a relevant text see ReviseSQE Business Law and Practice. You can obtain the text* by following this link.
Answer and feedback to last week’s question: XYZ Plc is a public limited company that wants to raise additional capital by issuing new shares to the general public. Which of the following statements best describes the process of issuing new shares in a public limited company?
- The company can issue new shares to any individual or entity without any restrictions or approvals.
- The company only needs to obtain the approval from its existing shareholders to issue new shares.
- The company can issue new shares without any formalities as long as it complies with the relevant legal provisions.
- The company must submit a prospectus to the regulatory authority and obtain permission to offer the new shares.
- The company can issue new shares only to its directors and employees as part of an employee share scheme.
The correct answer is 4: The company must submit a prospectus to the regulatory authority and obtain permission to offer the new shares. When a public limited company, such as XYZ Plc, wants to issue new shares and raise capital, it is required to follow certain procedures and comply with the applicable laws and regulations. One of the key requirements is the submission of a prospectus to the regulatory authority, such as the Financial Conduct Authority (FCA). A prospectus is a legal document that provides detailed information about the company, its financial position, the purpose of the share issue, and other relevant information to potential investors. Issuing new shares in a public limited company typically involves offering them to the general public, allowing individuals and institutional investors to purchase the shares. This process aims to ensure transparency and protect the interests of potential investors by providing them with comprehensive information about the company and its financial prospects.
Thank you for subscribing and let me know how you are getting on in your preparation through our Facebook Group. Feel free to forward this email to anyone you think will benefit.
You will hear from me again soon.
All the best
Dr Ioannis Glinavos
*As an Amazon Associate, I earn from qualifying purchases.
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