228 15: Share capital Part E Capital and the financing of companies
Study guide
Intellectual level
E Capital and the financing of companies^
1 Share capital
(a) Examine the different meanings of capital 2
(b) Illustrate the difference between various classes of share, including treasury
shares, and the procedure for altering class rights2(c) Explain allotment of shares and distinguish between rights issue and bonus
issue of shares2(d) Examine the effect of issuing shares at either a discount, or at a premium 2Exam guide
Share capital is an important syllabus area that lends itself well to different types of question. You may be
tested on the different types of share, what class rights are and how they can be altered.1 Members
A member of a company is a person who has agreed to become a member, and whose name has been
entered in the register of members. This may occur by: subscription to the memorandum; applying for
shares; the presentation to the company of a transfer of shares to the prospective member; applying as
personal representative of a deceased member or a trustee of a bankrupt.1.1 Becoming a member
A member of a company is a person who has agreed to be a member and whose name has been entered
in the register of members.Entry in the register is essential. Mere delivery to the company of a transfer of shares does not make the
transferor a member – until the transfer is entered in the register.1.2 Subscriber shares
Subscribers to the memorandum are deemed to have agreed to become members of the company. As
soon as the company is formed their names should be entered in the register of members.
Other persons may acquire shares and become members:
By applying and being allotted shares
By presenting to the company for registration a transfer of shares to them
By applying as personal representative or trustee of a- Deceased member
- Bankrupt member
1.3 Ceasing to be a member
There are eight ways in which a member ceases to be so.Key termFAST FORWARDFAST FORWARD