Rl1619QUESTION 1

What is the meaning of shares? Describe the type of shares can be issues.
1. Company Act 1965, share is a capital including stock.
2. Borland’s Trustee vs Steel Brother, share is a right interest belong to the shareholder,
measure with cash for the purpose of to determine of liability and benefit.

ORDINARY SHARES

 Ordinary shares are standard shares with no special rights or restrictions. They have the
potential to give the highest financial gains, but also have the highest risk. Ordinary
shareholders are the last to be paid if the company is wound up.
 Dividends are distributions to shareholders which are made out of the company's profits. A
company which does not have profits available for distribution cannot pay dividends. Even
where profits are available, the holders of ordinary shares have no legal right to demand that
dividends be paid. 
 The liability depens on capital that issued and ordinary shares also can vote in the Annual
General Meeting (AGM).

PREFERENCE SHARES

 Section 4, Company Act 1965 state that the preference share is a principle shareholder will
get priority in the distribution of dividend and when is redeemed in winding – up.
 Shares in this category receive a fixed dividend, which means that a shareholder would not
benefit from an increase in the business' profits. 
 However, usually they have rights to their dividend ahead of ordinary shareholders if the
business is in trouble. Also, where a business is wound up, they are likely to be repaid the par
or nominal value of shares ahead of ordinary shareholders.
 The preferences shares have no voting right in the Annual General Meeting (AGM).
 Get the priority in term of capital return in something winding – up.

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FOUNDING SHARES

 The share that give to the company promoter as a wages or firm’s sponsorship consideration.
 Right to be vote in meeting and have a special right to the surplus assets of the company
when the company winding – up.
 Get the right benefit from the huge dividend after the dividend payable to the ordinary
shareholder and preference shareholder.

QUESTION 2

Explain the differences between a shareholder and debenture holder.

SHAREHOLDER
Shareholder is a real owner of the company.
Shareholder can get dividend.
Company cannot buy the own share.
Dividen can pay if company get profit.
DEBENTUR
Debenture holder is a creditor of a company.
Debenture holder can get interest.
Company can buy own debenture.
The interest must be pay although the
company get or suffer loss.

QUESTION 3

A public company may obtain loan in the various form, among others by offering debentures. Discuss
the meaning of debenture.

1. In case Levy Abbercarris Slate & Sob Company, the Citty judges state the debenture as a
one document either creates a debt or acknowledge with any document meet with any
condition.
2. The document that issued by the company that provided the loan is either a short-term
loans or long-term loans.
3. In Section 4, Company Act 1965, debenture include the debenture share, bond, note and any
security of company whether as a charge on the assets of the company or not.

How the debenture may be issued?

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 i. In section 15(1)(C), the private companies are not allowed to rise debentures.
ii. Debentures must be issued under the authority of the Board of Directors.
iii. The offer of debentures is subject of what is stated in the prospectus.
iv. The company that isued the debenture would appoint the truetee, if not, the debenture cannot
be offered to the public.
v. The debenture registered by any company to the debenture holder include the name, address
and number of debenture held.
vi. The registration must be kept in the office register or any place that noted to the registrar
of companies. ( section 70(2) ).

QUESTION 4
i. State the definition of dividend.

 COMMON LAW
Distribution of net income (net revenue / profit of company after deducting corporate
tax ) to shareholders.

 SECTION 365, COMPANY ACT 1965

All companies including private companies are prohibited from issuing dividends except out
of profits available for the purposes. If companies do not get profit, the companies cannot
pay the dividends to shareholders.

ii. How dividend payment is made.

 Dividend payments to shareholders out of profits must be earned by the company

declaring dividend. For the purpose of payment of dividend, the subsidiaries and company are
separate entities. Case : Industrial Equity Ltd vs Blackburn.
 Refer to the articles of association of company. Case : Burland vs Earle.
Principles : The member’s of companies and the courts cannot intervene in the
declaration unless occur  the oppression and injustice.
 In the general meeting, the company may declare dividends, but shall not exceed the
amount recommended by the directors.

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iii. Provide the difference between interim dividend and final dividend.

INTERIM DIVIDEND END DIVIDEND

Dividend declared before the expiry or The declaration made
the end of the profit period. after gains obtained for a term expiring 
in profits.
Paid at the time other than the end of Declared or paid at the end of financial
the year. year.