BLP SGS 8 Activity 1 Solution 22-23

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BPP University College **We aren't endorsed by this school
Course
LPC 01
Subject
Business
Date
Aug 8, 2023
Pages
6
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LPC: BUSINESS LAW AND PRACTICE SGS 8 ACTIVITY 1 SOLUTION BUSINESS LAW AND PRACTICE SGS 8: FINANCING A COMPANY 1: EQUITY FINANCE (ISSUE AND ALLOTMENT OF SHARES) Legal Practice Course Activity 1 Solution LAW SCHOOL 6/8/2021/CRD Page 1 of 6
SGS 8 ACTIVITY 1 SUGGESTED SOLUTION LPC: BUSINESS LAW AND PRACTICE Page 2 of 6 30/05/2022 21:32:00 15/09/2021 14:34:00 /k LAW SCHOOL
LPC: BUSINESS LAW AND PRACTICE SGS 8 ACTIVITY 1 SUGGESTED SOLUTION ASSUME THAT THE NOMINAL VALUE OF ALL PREFERENCE SHARES IS £1 AND THAT THEY ARE ISSUED AT PAR (I.E. NO PREMIUM IS PAID). Precedent Article A Precedent Article B How much money will be paid each year as a dividend in respect of each Preference Share? Articles 8.1(a): Dividend due is 2p per share . Pursuant to Article 8.1(b) no further dividend is payable. However, the dividend is cumulative (see Articles 8.1(c) and (d)), meaning that [preference] dividends which fall due but are unpaid (in a year where the Company has insufficient distributable profits) will be paid as soon as profits are available to do so. Dividend is therefore capped at 2p per share in any given accounting period (i.e. year). Article 9.1(b)(i): Preference Dividend: 5p per Preference share . This right is cumulative (see Article 9.1(b)(ii) (as per Precedent Article A)); and Article 9.1(a): Participation in surplus profits on an equal footing with the holders of Ordinary Shares. This cannot be quantified yet, because the amount payable in a given year depends on how much surplus profit is available and how many shares the Company has in issue at that time. Therefore we cannot specify, in advance, the total amount of dividend payable in a given year. 2. If the Company were wound up on a solvent basis and with sufficient surplus assets available, how much money would be paid to the holder of each Preference Share? Article 8.1(e): Nominal value of each share (i.e. £1 ). Pursuant to Article 8.1(f) no further payment is due. Therefore capped at £1 per share. Article 9.2(a): Paid Up Amount of each share, defined as nominal value (i.e. £1 ) plus any premium (i.e. £0), totalling £1 per Preference share. Article 9.2(c): Participation in any surplus assets on an equal footing with all shareholders. This cannot be quantified yet because the amount LAW SCHOOL 6/8/2021/CRD Page 3 of 6
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