Part E Capital and the financing of companies 16: Loan capital 255Quick Quiz
1 Which of the following are correct statements about the relationship between a company's ordinary shares
and its debentures?
Select all that apply.
A Debentures do not confer voting rights, whilst ordinary shares do.
B The company's duty is to pay interest on debentures, and to pay dividends on ordinary shares.
C Interest paid on debentures is deducted from pre-tax profits, dividends are paid from net profits.
D A debentureholder takes priority over a member in liquidation.2 A fixed charge
A Cannot be an informal mortgage
B Can be a legal mortgage
C Can only attach to land, shares or book debts
D Cannot attach to land3 Company law requires a company to maintain a register of charges, but not a register of
debentureholders.
True
False^
4 In which of the following situations will crystallisation of a floating charge occur?
Select all that apply.
A Liquidation of the company
B Disposal by the company of the charged asset
C Cessation of the company's business
D After the giving of notice by the chargee if the contract so provides5 Certain types of charges need to be registered within 28 days of creation.
True^False