Escolar Documentos
Profissional Documentos
Cultura Documentos
Raising Capital
Week 3
Company Law
The University of Hong Kong
objectives
• equity (shares)
• voting rights
• economic rights (dividends, leftovers)
• share classes
share capital
• authorized share capital
• maximum number of shares allowed for issue
• may be in articles of association
• issued share capital
• total number of shares issued
• total number of shares issued + unissued = ?
• paid up share capital
• amount paid (issue price) by shareholders
• which is most important when assessing a company’s finances?
• statement of capital
share classes
• preference/preferred shares
• preferred dividend generally cumulative
• participating vs. non-participating (fixed-rate)
• Will v United Lankat Plantations Co (1914) (page 97)
• voting
• repayment priority
• Scottish Insurance Corp Ltd v Wilson and Clyde Coal Co Ltd (1949) (page 98)
• ordinary/common shares
• redeemable shares
• why?
• non-voting shares
2018 Company Law 9
The University of Hong Kong
prospectus problems
(civil and/or criminal liability)
• advertising
• Securities and Futures Ordinance (cap 571)
• misstatements in prospectus (cap 32)
• Misrepresentation Ordinance (cap 284)
• tort
prospectus problems
• advertising
• misstatements in prospectus (cap 32)
• untrue statement if it’s misleading in the form and context
• material omission is also an untrue statement
• on the hook?
• directors, promoters, and every person that has authorized the issue of the
prospectus (exemption for experts and regulators)
• defenses:
• without consent/knowledge
• withdrew consent (+public notice)
• reasonable grounds to believe the statement to be true
• relied on an expert
• immaterial
tort
• deceit (fraud)
• false representation made: 1) knowingly, or 2) w/o belief in its truth, or 3)
recklessly, careless whether it be true or false, Derry v Peek (1889) (page
127)
• only applies to initial subscribers unless intention also existed for investors
purchasing on open market, Peek v Gurney (1873) (page 128)
• damages
• negligent misstatement (“reasonably foreseeable”)
• tort may arise if financial loss is caused by statement by a party that has a
duty of care to the other party
• Al-Nakib investments (Jersey) Ltd v Longcroft (1991) (page 129) compared
to Possfund Custodian Trustee Ltd v Diamond (1996) (page 130)
prospectus problems
(civil and/or criminal liability)
• advertising
• Securities and Futures Ordinance (cap 571)
• misstatements in prospectus (cap 32)
• Misrepresentation Ordinance (cap 284)
• tort
questions?
Company Law
The University of Hong Kong
Raising Capital
Week 3
Company Law