LW E Capital and the financing of companies

What is paid-up capital?

• 1 The amount the company has asked members to pay
• 2 The amount of the company's borrowing
• 3 The part of the nominal value of the shares that has been paid
• 4 The total market value of the shares

What is a rights issue?

• 1 An issue of free shares from reserves
• 2 A repayment of share capital
• 3 A sale of shares to the public only
• 4 An offer of new shares to existing members in proportion to their holdings

Debenture holders are:

• 1 Auditors
• 2 Members of the company
• 3 Directors
• 4 Creditors of the company

Which is a feature of a floating charge?

• 1 It is over one specific asset only
• 2 It is over a class of assets that changes, and the company may deal with them until it crystallises
• 3 It prevents the company from selling any asset
• 4 It does not need to be registered

What usually happens to a company charge that is not registered?

• 1 It is converted to a fixed charge
• 2 It is generally void against the liquidator and creditors
• 3 It becomes shares
• 4 It is fully valid

What does the doctrine of capital maintenance protect?

• 1 The auditors
• 2 Creditors, by limiting the return of capital to members
• 3 Shareholders from losses
• 4 Directors from liability

From what may a company lawfully pay a dividend?

• 1 Share capital
• 2 Share premium account
• 3 Borrowings
• 4 Distributable profits

Shares are issued at a premium. Where does the amount above the nominal value go?

• 1 To the loan account
• 2 To distributable profits
• 3 To the share premium account
• 4 To directors as a bonus