RAISING CAPITAL BY SHARE SALE PROFESSIONAL ENGLISH IN USE FOR LAW

 

PROFESSIONAL ENGLISH IN USE FOR LAW 21.RAISING CAPITAL BY SHARE SALE

 

A Share capital UKsetup.co.uk – Company formation specialists How companies raise capital A company limited by shares may raise capital by borrowing money and through the sale of shares. A company’s balance sheet – a statement of the financial position of a company at a specific time, for example at the end of the financial year – shows how the company is capitalised, or financed, by providing details of debt and share funding. ‘Capital’ refers to B Share Value All shares have a nominal value, generally of £1, also known as the par value. This value is set out in the capital clause of the Memorandum. Shares can be issued at a premium – for a sum greater than their nominal value – but they cannot be issued at a discount – less than nominal value. C Rights attaching to shares A company may issue different classes of shares, which have different rights attached to them. The usual rights include: ·       A right to dividend, that is, a share in the profits. A company may only declare a dividend if it has made a profit. ·       A right to vote on resolutions, for example proposals on matters relating to the approval of director’s contracts, at the company’s annual general meeting (AGM) – a meeting of all the shareholders with the directors. EXERCISES 21.1 Match the two parts of the sentences then replace the underlined words and phrases with alternative words and phrases from A opposite. Pay attention to the grammatical context. There is more than one possibility for three of the gaps. 1. Shares can only be issued 2. The company Articles may allow directors 3. If more shares are applied for than the company has to offer, 21.2 Make word combinations from B and C opposite using words from each box. Then use appropriate word combinations to replace the underlined words and phrases in the sentences below. 1. The Companies Act requires 75% of the shareholders to show their opinion about a special proposal to change the company Articles. 2. The company will announce publicly that shareholders are going to be paid a proportion of the company’s profits.

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