COMPANY CAPITAL STRUCTURES AND FUNDRAISING
Transcript: dividends must only be paid out of profits , yet the concept profit is not defined in the corporations act Summary share buy -back is set out in section 257A-257J THANKS FOR LISTENING 1: Depend on the size of the business, objective, the amount of the company lking for rais, and business planning. 2: Equity capital (short-term) but keep more than 51% shares 3: Debt capital (long-term) Director's liability Pros 1: Not required to pay investors back 2: No interest payments Numine Ltd are intending to commence mining for uranium in South Australia after a feasibility study stated the area should yield uranium. The auditors of Numine Ltd have provided a three-year forecast in which they have stated that development costs will be $2 million in year 1, $5 million in year 2 and $3 million in year 3. The auditor’s project that once operational the estimated profit will be a minimum of $2 million a year. Apply the law Cons 1: Loss of part ownership 2: Shareholder rights 3: Disclosure requirements Pros 1: Retain Control 2: Tax Advantage 3: Easier Planning Conclusion Payment of dividend The directors wants to buy-back shares because they have concerned about malicious purchase problems. 1.Minimum holding buy -back 2. Employee share scheme buy back 3. On -market buy -back 4. Equal access buy -back scheme 5. electibe buy -schemes Legal Problems 2 Legal Problem 1 Pros and Cons of Debt capital 3. the information stement offers secuties under a discloure document that contain misstatement section 728-729 , in accordance with section 731-733, a number of are defense are available for missttement including the exercise of the due dillgence Relevant law There are five types of share of back in the section 257A Issue HHA Textbook page 282 - 283 section 259A-259F restrcit a company from acquiring its own shares or the shares of anther company that controls it, there are a number of reasons why the corporation act prohibits such acquisition 1. company its own money to acquire its shares the company is not increasing its share capital buy the purchase transaction. 2.misleading the stock market regarding their value- voting right The directors would like their fund raising to be a combination of debt and equity if that is possible and will be swayed by your advice in this area. section 254u, which is a replaceable rule, the board of directors may determine the payment of a dividend . Sections Related TO THE Case company's consitution , section 254u- 254w of the corporations act set out rules with respect to the declaration and payment of dividends setion 254u and 254v identify different produces denpending on whether or not a company ha s constitution Company Capital Structures and Fund Raising 1. consider about the ration of debt capital compared with share capital Advise the directors of Numine Ltd regarding the requirements of raising funds from the public and the obligations they will have under the Corporations Act, and at general law, as part of the fundraising THE Numine company want to use the retained earning to buy back some of the shares Relevant law The differences between Debt & Equity Capital Presenter: Xingyu Li (11882166) aka: Jonathan Aden Meca (99212627) QiWen (12116428) Wendy Our Suggestions 2. section 256B-257J allow companies to buy back their own shares rules company's liabliy Numine LTD Dividend is a distribution or apportionment of the profits earned by a company to the shareholder Two cases that have explored the meaning of the word profit 1. Lee V Neuchatel Asphalte CO(1889 ) this case deal with deprciation of fixed assets 2. Dimbula V Vally (Ceylon) Tea Co Ltd Laurie(1961) this case deal with revaluation of fixed asset Relevant law Company Capital Structures and Fund Raising Section 700 & 761 (A)： The coverage of the fund raising rules. Section 708: Offers that do not deed disclosure Section 711: Prospectus content--specific disclosures Section 739 & 741: ASIC stop orders and powers Section 256: Share capital reductions and share buy backs Section 588G: Director's duty to prevent insolvent trading by company Section254V & 254T: Dividends Legal Problem 3 Pros and Cons of Equity capital Rights Issue Exemption Requirements (a) the offer is made to all existing holders in the offer class. (b) the offer is pro rata to existing offeree's holdings; and (c) the terms of the offer are the same as the original offer Cons 1: Qualification Requirements 2: Discipline 3: Collateral Using the retained earning buy own share is illegal Case
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