37145060 Chapter 16 Share Capital

7/28/2019 37145060 Chapter 16 Share Capital

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16-1TehJooLingAllrightsreserved

ClassesofSharesItisgeneralpracticeforaco.toissuedifferentclassesofshares.Suchclassesofsharesmaydifferwithrespectto

theirnominalvalue,ormorefundamentallytherightsattachedtothem.

Section66(1)CA65providesthatacompanymaynotissuePSunlesscertainrightsaresetoutintheMemorandum/ArticlesofAssociationone.g-cumulativeornot;prioritytodividendpaymentvisavisothershares,rightto

participateinsurplusofassetsandprofits,prioritywithrepaymentinwindingupandvotingrights.

ClassRightsRightsenjoyedbyparticularclassesof

shares.Suchrightswilldealwithmattersconcerningdividends,returnofcapital,

votingandtherighttoappointdirectors.Allsharescarryingidenticalrightsaregrouped

togetherintoaclassofshares.(e.gordinarysharesandpreferenceshares)

PreferenceShares(J096a)

Section4CA65-asharebywhatevernamecalledwhichdoesnotentitletheholdertovoteatageneralmeetingortoparticipatebeyondaspecifiedamountinanydistributionwhetherbywayofdividendoronredemption,inawindinguporotherwise.-haspriorityoverordinaryshares.-carriestherighttoafixeddividend.

Rightsattachedtopreferenceshares(i)righttocumulativedividends.

- referstotherighttoreceivearrearsofdividendsIROthoseyearswherenodividendisdeclared.

(ii) righttoparticipateinsurplusprofits.- referstotherightofthePS/holdertoenjoyahigherdividendin

thoseyearswheretheco.hasmadehigherprofitsandisabletogiveahigherdividendtoitsordinaryshareholders.

(iii)righttoparticipateinsurplusassetsinthewindingup.- referstotherightofPS/holderstoshareinthesurplusassetsof

theco.whentheco.iswoundup.

(iv)prioritytorepaymentofcapital.- referstotherightofthePS/holderstoberepaidtheircapital

aheadoftheordinaryshareholdersinawindingupoftheco.

(v) limitedvotingrights.- althoughs.4definesaPSasasharethatdoesnotcarrytheright

tovoteatGM,theycanandoftenare,givenlimitedvotingrights.e.gs.148CA65


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VariationofClassrights(J05Q10a;J09Q6b)

Section65(1)CA65-Avariationofaclassrightisonewhichdirectlyalterstherightofaclassofshareholders.

(Adistinctionmustbedrawnbetweenavariationofaclassrightandamerevariationoftheenjoymentofclassrights.)

Art4TableAFourthScheduletherightsattachedtoanyclassofshares

(unlessotherwiseprovidedbythetermsofissueofthe

sharesofthatclass)maybevariedbyoneoftwomethods,

(i) bythepassingofaspecialresolutionataseparatemeetingofthatclassofs/holders

OR(ii) withthewrittenconsentoftheholders

ofatleastthreefourths(75%)oftheissuedsharesofthatclass.

DissatisfiedShareholder

- Allowsholder(s)ofnotlessthan10%oftheissuedsharesoftheclassinquestion

- TochallengethevalidityoftheVariation/

toapplytocourtunderSection65CA65tohavethevariationorabrogationoftheirrightscancelled.

- Applicationtothecourtmustbemadewithin1monthafterthedateonwhichtheconsentwasgivenortheresolutionwaspassed.

- Thevariationorabrogationwillbeofnoeffectuntilconfirmedbythecourt.

WhatisNOTvariation?(a)Issuingsharesofthesameclasstoallotteeswhoarenotalreadymembersofthatclass(unlessthedefinedclassrightprohibitsthis)

-WhitevBristolAeroplaneCompanyLtd(althoughWsblockvotingpowerhadbeendiluted,therewerenovariationofWsrightspershare)

Section65(6)CA65-theissueofPSrankingparipassuwithexistingPSisdeemedavariationunlessthefirstissueexpresslyauthorizedit.

theco.willhavetofollowtheprocedureinitsAA.(theMalaysianpositionisdifffromthecommonlawpositioninWhitevBristolAeroplane,whichheldthatevenanissueofPSrankingparipassuwithanexistingone,willnotamounttovariationofrights.)

(b)Subdividingsharesofanotherclasswiththeincidentaleffectofincreasingthevotingstrengthofthatotherclass- GreehalghvArderneCinemasLtd(althoughtheotherclassofshareshadincreasedtheirvotingpower5fold,therewasnovariationofGsrightspershare)


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Issue/AllotmentofShares&TransfersWhensharesareissued/allotted,thepriceisreceivedbytheco.Whensharesare

sold,themoneyispaidtotheshareholder.Theco.receivesnothing.

Shares

Section98CA65-Ashareisatransferableformofproperty.LegaltitleinashareisvestedinthepersontowhomtheshareisallottedortransferredandwhosenameisontheregisterofmembersIROthatshares.

Whoisamember?ApersonwhohasagreedtobecomeamemberANDwhosenamehasbeenenteredintotheregisterofmembers.(hence,whereshareshavebeensoldbutnot

registeredinthenameofthepurchaser,thepersonwhosenameisontheregisterofmembersremainsthelegalowneroftheshares.)

Companymustwithin1monthissuethenewsharecertwiththetransfereesnameprovidedtherearenosharetransferrestrictions.

Howdoyouceasetobeamember?1. WhenMdies2.Whensharesaretransferredand

transferisregistered

3.Whenco.isdissolved.

TransferofSharesSection98CA65

propersequence:1. Thetransferor(mustbetheregisteredowner)executesaproperinstrument2. Thesharecertificateandtransferformarelodgedwiththeco.3. Ifthetransferformisinorderandtherearenosharetransferrestrictions,the

co.mustwithin1monthissueanewsharecertificateinthenameofthetransferee-Section105(1)CA65

4. Iftherearesharetransferrestrictions,theymustbecompliedwithotherwisethetransferwillbeinvalid.

5. Ifthedirectorshaveadiscretiontorefusetoregisteratransfer,theymustmakeadecisionwithinareasonabletime.Intheeventthatthetransferisrejected,noticeoftherejectionandastatementoffactsmustbesenttothetransferorandtransfereewithinonemonthafterthedatethatthetransferwaslodgedwiththeco.Otherwise,thetransfermustberegisteredandanewsharecertificateissuedwithin1month

RestrictiononTransferofSharesSharesarefreelytransferableunlessrestrictionsareimposedbytheMAorAA- LimOwGoikvSungaiMerahBusCoe.g.Preemptiverights-Atransferinbreachofthesharetransferrestrictionsmaybesetaside.Inparticular,atransferinbreachofrightsofpre-emptionisinvalid.

DIRsDiscretiontoRefuseRegistrationofaTransferDirectorshavenodiscretiontorefusetoregisteratransferofsharesunlessthearticlessoprovide.

Whereprovided,thepowermustbeexercisedbonafideinwhattheyconsiderisintheinterestsoftheco.andnotforanycollateralpurpose- KesarSinghvSepangOmnibusCoLtd

BlankTransfersExecutedbythes/holdernamedinthesharecertificatebutwhichisblankasregardsthetransfereeObtainedfromRegisteredOwnerofShares- Thetransfereeobtainsanequitableinterestinthoseshares

eventhoughhisnameisnotfilledinonthetransferformObtainedfrompersonotherthanRegisteredOwner- Mostoftheproblemsarisewhenatransferorpurportsto

transfersharesthatarenotregisteredinhisownname.- Thetransferorcannotthenpassgoodtitle,inaccordance

withtheprinciplenemodatquodnonhabet.- Aforgedtransferisatotalnullityandnotitlecanpass

undersuchtransfer-BartonvLondon&NorthWesternRailway

ShareCertificateEstoppelThesharecertificatecontainsthenameoftheholderandtheamounttowhichthesharesarepaidup.Thisamountsto

representationsbytheco.thatthepersonnamedinthesharecertificateistheownerofthesharesandtheco.willbeestoppedfromdenyingthistoanypersonwhoreliedonittohisdetriment-DailyTelegraphCovCohen

DailyTelegraphCovCohen

whereasaresultofaforgedtransfertheoriginalownerwasremovedfromtheregisterofmembersandreplacedbythefirsttransferee.X,whowasdulyissuedwithnewsharecertificatebytheco.XinturntransferredthesharestoY,whowastheregistereds/holderwhentheforgerywasdiscovered.Thecourtheldthattheoriginalownerwastoberestoredtotheregisterofmembers,butYwasentitledtodamagesfromtheco.asitwasestoppedfromdenyingYstitle.

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37145060 Chapter 16 Share Capital