LW E Capital and the financing of companies

Written by Saad Rahman (ACCA)

ACCA · Corporate and Business Law · 8 questions

Name: ____________________   Date: ____________

1. What is paid-up capital?

   • A The amount the company has asked members to pay
   • B The amount of the company's borrowing
   • C The part of the nominal value of the shares that has been paid
   • D The total market value of the shares

2. What is a rights issue?

   • A An issue of free shares from reserves
   • B A repayment of share capital
   • C A sale of shares to the public only
   • D An offer of new shares to existing members in proportion to their holdings

3. Debenture holders are:

   • A Auditors
   • B Members of the company
   • C Directors
   • D Creditors of the company

4. Which is a feature of a floating charge?

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

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

   • A It is converted to a fixed charge
   • B It is generally void against the liquidator and creditors
   • C It becomes shares
   • D It is fully valid

6. What does the doctrine of capital maintenance protect?

   • A The auditors
   • B Creditors, by limiting the return of capital to members
   • C Shareholders from losses
   • D Directors from liability

7. From what may a company lawfully pay a dividend?

   • A Share capital
   • B Share premium account
   • C Borrowings
   • D Distributable profits

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

   • A To the loan account
   • B To distributable profits
   • C To the share premium account
   • D To directors as a bonus