CLAW2201 Week 6: COMPANY FINANCE:
1. EQUITY FINANCE- fundraising through share issues
a) Share Capital:
i. Issue of shares
S124(1)(a): A company has a right to issue and cancel shares in the company.
S198A(1): The board of directors has discretion as to when and how to issue shares
S254B(1): A company may determine:
The terms of which its shares are issued; and
The rights and restrictions attaching to the shares.
S254D(1) CA: In a proprietary company, before issuing shares of a particular class, the director must offer them to the existing holders of shares of that class. As far as practicable, the number of shares offered to each shareholder must be in proportion to the number of shares of that class that they already hold.…show more content…
(15) No consideration is to be provided for the issue or transfer of the securities (e.g. no monetary payments).
(18) Made as consideration for an offer to acquire securities under a takeover bid (when one company takes over another company, disclosure statements for shares in exchange for the surrender don’t need ordinary disclosure because the whole process is already highly regulated under the disclosure requires of the CA).
S709 provides for the different TYPES of disclosure documents possible:
(1) Prospectus – full disclosure doc
(2) Short form prospectus – refer to materials lodged w ASIC
(2) A profile statement – requires ASIC approval
(3) Offer information statement- for issue of securities $10m or less s709(4).
S718 states that a disclosure document to be used for an offer of securities must be lodged with ASIC.
May ONLY be issued by public companies- s113(3)- pty co must x engage in activity requiring disclosure
2. DEBT FINANCE: fundraising through borrowing
S124(1) states that a company can (f) grant a security interest over the co’s property.
Co= grantor, Lendor= security holder, fixed charge= security int over non-circulating asset s339(4) PPSA, floating charge= circulating security interest in circulating asset, consider if security interest has “attached” and is “perfected”, no diff b/w floating & fixed charge; look at who got