This chapter considers the statutory rules governing share capital requirements, especially the rules governing allotment of shares, payment for shares, and capital raising. Share capital rules are predominantly statutory and this chapter looks at the statutory framework on allotment including the authority of the directors to allot shares, the need for rights issues; the ability to accept a non-cash consideration; and the prohibitions on various types of consideration, in the case of public companies. Minimum capital requirements and the need to avoid issuing at a discount are considered. A key issue for public companies is whether to make an offer of their shares to the public or seek to have their shares traded on a public market. The regulatory framework for public offers of shares, essentially requiring a prospectus, is considered.
Chapter
21. Share capital—capital raising and payment
Chapter
21. Share capital—capital raising and payment
This chapter considers the statutory framework governing share capital requirements including the provisions with respect to allotments of shares, the rules on premiums and discounts, the requirements for authorisation to allot, and the need to provide pre-emption rights. The rules governing cash and non-cash payment for shares are also considered. For the largest companies, there are additional issues surrounding capital raising which are considered. The position governing public offers by private companies is reviewed as well as the intended reforms of the listing regime. There are significant changes to the rules on public offers of shares and the need for prospectuses and these requirements too are considered. The issue of possible liability for misleading prospectuses is also addressed.
