Issue is sanctioned by the court - allotment of shares, Business Law and Ethics

Issue is sanctioned by the court - allotment of shares:

Not less than one year has elapsed since the company was entitled to commence business.

This provision obviates the risk of a hasty or premature issue at a discount. The statutory assumption appears to be that, having been in business for at least one year, the company would most likely have published its first balance sheet and declared a dividend which could induce a greater demand for its shares.

 The issue is sanctioned by the court.

Although the grounds upon which the court is to excercise its discretion to sanction or reject the proposed issue are not spelt out, it appears that it would primarily be acting as the creditors' watchdog to protect their interests. This is so because creditors were not represented at the general meeting which passed the resolution authorizing the company to issue the shares at a discount and so the court steps in to protect their interests. If the issue of shares at a discount would adversely affect any creditor, the court would probably not sanction the issue.

The issue is made within one month after the court's sanction.

This provision acknowledges the fact that the stock exchange market is a highly fluid market. If a company's members pass a resolution authorizing an issue at a discount because of the prevailing market conditions the directors must act on the resolution before the market conditions change. The statutory assumption appears to be that the market conditions would have materially changed within one month after the court's confirmation. If the directors were to issue the shares at a discount despite the changed conditions, the issue could not be justified.

Another general meeting should be held to enable the members to reconsider their decision in the context of the changed conditions. However, the directors may ask the court to extend the time for issuing the shares at the prescribed discount if they are of the view, and the court concurs, that the market conditions have not materially changed. The flaw with this provision is that it does not provide a time limit for applying to the court for its sanction

Posted Date: 1/12/2013 3:20:06 AM | Location : United States







Related Discussions:- Issue is sanctioned by the court - allotment of shares, Assignment Help, Ask Question on Issue is sanctioned by the court - allotment of shares, Get Answer, Expert's Help, Issue is sanctioned by the court - allotment of shares Discussions

Write discussion on Issue is sanctioned by the court - allotment of shares
Your posts are moderated
Related Questions
A is large property developer who is listed on the Kuala Lumpur Stock Exchange. B is a building contractor. A employed B in 2008 to build a large office complex comprising 3 towers

Shares Issued At A Premium: A company may at times issue its shares at a price above their nominal value, i.e at a premium. This may be necessitated by the fact that the compa

QUESTION 1 (i) What are the principles applicable regarding the unjustified termination of a contract of employment (ii) What would be your views regarding the legal issues

Question 1: Taking the case of Mauritius, in the machinery of government, the Procurement Policy Officer is the central organ of the Government that regulates the procurement

QUESTION 1 Why is the United States, which is a leader country in so many areas, so far behind in the provision of social welfare benefits? QUESTION 2 (a) Who uses private

hello.. iahve one business law assignment can you please give me quote?

Mrs. Lanuzzi began smoking in 1951 when she was fifteen. She smoked two packs a day until her death from lung cancer in 1984. She had tried several times, unsuccessfully, to quit.

Legal Profession - Magistrates However the magistrate is an advocate that who is appointed through the Judicial Service Commission to the post of - The District M

Issue of additional preference shares: In the Bristol Aeroplane Case it was said of the issue of additional preference shares that:                    "the existing prefere

State Article 15 of air and outer space law Article  15  states  that  any  charges  that  may  be  imposed  or  permitted  to  be  imposed  by  a contracting State for the use