Company Law 1 - University of Wolverhampton

Self-Study Questions1 What are the regulations governing the public issue of securities?2 What are ‘the listing particulars’? What must be specified therein?3 What sanctions are provided by the Act against those who are responsible for false or misleadingparticulars (both civil and criminal)?4 When is a prospectus used? What must it contain?5 Who can avail of the remedies provided by the Act?Sample Questions1 Jo owns a catering business which supplies sandwiches to hungry company executives. Thebusiness has been a huge success and she decides to apply for a Stock Exchange listing for acompany called Royal Bite plc and shares are issued to the public. Together with her friend Harry,who is an expert on healthy eating, she issued listing particulars in which the prospects for thecompany are described as ‘wonderful’. The listing particulars contain a paragraph by Harry praisingthe ingredients used in the food as particularly healthy. Two weeks after the successful flotationof the company, the Minister of Health condemns one of the ingredients used by Jo in hersandwichesas likely to cause brain damage. Harry had known of some research which had reached this conclusion,but he did not believe it. Jo had not known of this research until the day before theMinister’s statement, on which day she sold all her shares in Royal Bite plc. The shares lost 60pence in value on the day of the Minister’s statement. Angela had bought 200 shares on thelaunch of the company; Michael bought 200 shares on the Stock Exchange, just before theMinister’s statement.Advise all the parties of their rights and liabilities.(Wolverhampton LLB by Distance Learning Question.)2 Cedric and Isabel work in a tourist office. For a long time they thought about forming a limitedcompany to commence business as travel agents. They both had substantial financial resourcesand last week found ideal premises from which they could trade.Advise them:a on the procedures necessary to incorporate a public limited company; b as to any capital requirementswhich they must meet before the company can be incorporated as a public limitedcompany; c as to whether they can use the name Thomas Cook (Windsor) plc Travel Agents; d asto any further procedures which must be satisfied before the company can commence trading.(Wolverhampton LLB by Distance Learning, May 1999, Question 2.)