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Explanation & Answer
Attached.
Question 1:
Part a:
Based on the above case, I can say that the Board can issue shares towards shareholders.
However, the issuing of shares to the shareholders can only happen once they agree to receive
shares instead of the provided dividend, which can only be half or whole partly. This statement is
based on the Corporate of Act 200, provision which the constitution of the company can do.
As per the provisions of Corporation Act, 2001, if stated in the constitution of the company,
Board may issue shares to the shareholders, only if they agree to receive shares in lieu of a
proposed dividend, either whole or part. In this matter, based on the below provisions statements
applied in the Corporation Act, 2001, the Board can prefer to settle on the issuing shares in lieu
of dividends:
•
The shares that are offered to the investors are given with the same terms and are given
the same rights as the offers given to all investors of that class who acknowledged the
offers.
•
The opportunity is given to acknowledge the shares to all the investors.
•
The shares offered in lieu of the proposed dividend are accessible to all investors of the
same class and with the same terms and conditions.
•
The 56 section provisions are gathered by the Board
•
The investors are given equivalent rights to get partakes in lieu of a dividend, there ought
to be appropriate upkeep of proper maintenance of relative rights or both.
Part b:
As a continuation of the case, below are the lists of powers that Shareholders in Extraordinary
General Meeting (EGM) will have to exercise based on the Corporation Act, 2001 provisions?
As based on listed below, EGM couldn't propel the Board not to continue with the proposed
share issue. Be that as it may, modification the constitution of the Company can be made by
investors in EGM.
•
Major exchange can be endorsed
•
Liquidation of the organization
•
Approve an amalgamation under area 246
•
Approve, adjust or repudiate the constitution of the organization
Question 3:
Part a: In accounting, any management or company must know what certain disclosure should
be included in the financial statement. Hence, for the above case scenario, all the materials
disclosure should be included in the financial statement as required by ASIC chapter 6D. Hence,
this would affect the Prospectus’s user’s decision. Also, as based on ASIC Chapter 6D- RG
228.77, the business model and any ris...
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