Company Law 1 - University of Wolverhampton

Learning Project for Company Law 1: Shares and Maintenance of Share CapitalEssential 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)Guidance notesThis Learning Project is covered by Units 7 and 8 in your Module Planner. In carrying out yourreading and research you should have special regard to the following key points.• Types and classes of share capital.• Increase, alteration and reduction of capital.• Variation of class rights.• Issue of shares.• Transfer and transmission of shares.Case law and statutesPlease refer to the materials listed in Study Units 7 and 8.Sample Questions1 a Distinguish between the issue of shares at a premium and theissue of shares at a discount.b Inka plc has a fully authorised share capital of £200,000 dividedinto 150,000 ordinary £1 shares and 50,000 £1 6 per cent nonparticipating preference shares. The preference shares have aright to preferential payment of capital in a winding-up.The directors wish to increase the authorised share capital to£300,000 and make a new issue of 75,000 ordinary shares and25,000 preference shares on the same terms as the existing shares.i What procedures must be followed to increase the share capitaland for the allotment of the new share issue?ii John already owns 10,000 ordinary shares and Henry owns 5,000 preference shares. Whatrights (if any) do they have inrespect of the new share issue?c The new shares were subsequently issued. There were no profitsavailable for distribution in the year ended 30 June 1999 but therewere £80,000 profits available for distribution in the year ended 30June 2000.i How should these profits be distributed between the variousclasses of shareholders?