Company Law 1 - University of Wolverhampton

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Selangor United Rubber Estates Ltd v Cradock (No 3) [1968] 1 WLR 1555Wragg Ltd, Re [1897] 1 Ch 796Companies Act 1985: ss 80, 84, 85, 99–116, 130–134 and 142–162Financial Services and Markets Act 2000: s75(1)Self-Study Questions1 Distinguish between share capital, loan capital, capital reserve, reserve capital, uncalled capitaland capital redemption reserve fund.2 What is the difference between uncalled capital and reserve capital?3 Can a public company issue shares in consideration of work to be done or services to be performed?4 Can a subscriber to the memorandum pay for his shares in kind?5 If a company issued its shares originally at £1 each, their nominal value, but they are now worth£5, must it issue further shares at £5 each or only £1?Sample Questions1 ‘The rules governing use by a company of its capital are strict and effective.’Discuss.(Wolverhampton LLB by Distance Learning Question.)2 Twit and Stooge, the directors and shareholders in Plantations plc, hold 150,000 of the 250,000£1 shares in the company. In 1990 the company was in financial difficulty and their bankers refusedto help.Hook and Crook heard of their problems but were only prepared to help if they could purchaseshares in the company. Consequently, Hook and Crook were allotted the remaining 100,000shares. Hook supplied the company with raw materials and it was agreed that the £50,000 £1shares he received would be paid for as follows:a as to £10,000 by way of set-off against the value of raw materials already supplied;b as to £20,000 by the company immediately purchasing raw materials to that value from Hook;c the remaining £20,000 to be borrowed from Cash Ltd, a subsidiaryof Plantations plc, to pay for the shares, Hook repaying it within 12 months.It was further agreed that the company would buy all its rawmaterials from Hook over the next five years as part of this package.Crook loaned the company £150,000 also on the understanding that heobtained 50,000 £1 shares; of the money he advanced it was understood that £40,000 would berepaid to him immediately and regarded as payment for the shares. The company recently wentinto liquidation.Advise the liquidator.(Wolverhampton LLB by Distance Learning Question.)3 Explain and evaluate the law restricting the power of companies to assist people who wish topurchase that company’s shares.(Wolverhampton LLB by Distance Learning Question.)
Study Unit 9 Suggested minimum study hours: 10TopicRaising Capital – Offer of Shares to the PublicIntroductionVarious regulations are essential to ensure that the market for shares is regulated.Objectivesa To consider the procedures and regulations which must be observed in making public issues ofshares.b To examine the remedies which are available to a shareholder who haspurchased shares on the strength of misleading listing particulars or prospectus.c To examine the regulatory mechanisms provided for by the Financial Services and Markets Act2000.Essential ReadingThese titles have been supplied as part of your study materials.Company Law by John Lowry and Alan Dignam OUP 2006Statutes on Company Law 2007-2008Cases and Materials on Company Law (Andrew Hicks and S Goo)General ReadingThese titles have not been supplied and are not essential reading, butyou may wish to refer to them to further your understanding.Gower and Davies: the Principles of Modern Company Law, Davies –Relevant Chapter(s)Case law and statutesAl-Nakib Investments (Jersey) Ltd v Longcroft [1990] 1 WLR 1390Andrews v Mockford [1896] 1 QB 372Caparo Industries plc v Dickman [1990] 2 WLR 358Derry v Peek (1889) 14 App Cas 337Hedley, Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465Houldsworth v City of Glasgow Bank (1880) 5 App Cas 317Peek v Gurney (1873) 6 HL 377 (HL)Possfund Custodian Trustee Ltd v Diamond [1996] 2 BCLC 665; [1996] 2 All ER 774R v Feld [1999] 1 Cr App R(S) 1R v Kylsant [1932] 1 KB 442Smith New Court Securities Ltd v Citibank NA [1996] 3 WLR 1051Companies Act 1989: s131Financial Services and Markets Act 2000Misrepresentation Act 1967: ss1 and 2Theft Act 1968: s19
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Company Law 1 - University of Wolverhampton

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