Question
Hoppies Pty Ltd was incorporated in July 2012. The company's share capital consists of 30,000 ordinary shares issued at a price of $5.00 per share
Hoppies Pty Ltd was incorporated in July 2012. The company's share capital consists of 30,000 ordinary shares issued at a price of $5.00 per share and 10,000 preference shares, issued at a price of $2.00 per share and with a dividend rate of 7% per annum. The rights attached to the preference shareholders are set out in a special resolution passed by the company shortly after its registration. No mention is made in any company documents about rights attaching to the issue of new preference shares.
The company proposes to raise share capital by undertaking four transactions in the following order:
- to increase the dividend rate for preference shareholders from 7% to 12% per annum;
- to issue 5,000 new preference shares on the same terms as the existing preference shares;
- to divide the ordinary shares into two groups, Group A and Group B shares. Group A shares will have two votes for each share whereas Group B shares will have one vote for each share;
- to issue 30,000 new Group B shares to new investors at an issue price of $5.00 per share.
Which transaction(s) constitute a variation or cancellation of share class rights?
a.1, 2, 3 and 4
b.1, 2, 3
c.None, as only the constitution can enable a company to vary or cancel share class rights
d.1, 3 and 4
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