BLAW20001 Lecture Notes - Lecture 9: Rodney Adler, Rights Issue
5 Jun 2018
School
Department
Course
Professor
Lecture 9
Increasing share capital
Process of share issue
-> generally, a decision of the board: s198A [RR]
S136: constitutional change provision
S136(2): modify constitution
S3B: adopt costitutio if ou do’t alread have oe
No constitution = no variation of class rights procedure -> therefore, follow the Act
Directors must exercise their share issue power for a proper purpose (in good faith, in best interests
of company, not misuse info/position etc etc)
Types of share issues: IPOs, private placements, rights issues, DRPs and bonus issues
Public not the same as listed public
Assume unlisted if not given in question
Rights issue: shareholders cant be made to pay more for their shares than they already have
S5(16): the amount of liability is limited to the amount unpaid, if any, on shares
DRP: rather than receiving cash dividend, can take up cash dividend in shares in the current period
Bonus issues: bonus shares - no cash leaves company
However, some restrictions on directors' and companies' powers exist
Member approval required
Member approval may be required in special circumstances
-> Variation of class rights - s246B
1. Is it a variation? -> start with s246C and general law
2. If it is a variation, how do we do it?
S246C(1) or (2) deemed class variation
S246(B)2
-> Related party transaction - Ch2E
A public company issues shares (financial benefit) s229(3) to a related party as defined by s228
It could be a director of the public company s228(2A), a director of the entity which controls the
public company s228(2B)
S208
A public company has given a financial benefit issue of shares under s229(3) to a related party under
s228 -> member approval required or exempt
Relevant exemptions: market value transaction, arms-length s210 therefore, no member approval is
required
If member approval is required, the people who are to receive the benefit are not permitted to vote
-> Change to constitution - s136(2)
-> Issuing preference shares s254A(2)
1. Put their rights into constitution s136(2)
2. Pass special resolution
Figure 19.4 TB
Disclosure under Chapter 6D
Unless exclusion in s708 applies, a product disclosure statement (PDS) (prospectus or OIS) must be
prepared and lodged with ASIC
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
> generally, a decision of the board: s198a [rr] S(cid:1005)3(cid:1010)(cid:894)(cid:1005)(cid:895)b: adopt co(cid:374)stitutio(cid:374) (cid:894)if (cid:455)ou do(cid:374)"t alread(cid:455) have o(cid:374)e(cid:895) No constitution = no variation of class rights procedure -> therefore, follow the act. Directors must exercise their share issue power for a proper purpose (in good faith, in best interests of company, not misuse info/position etc etc) Types of share issues: ipos, private placements, rights issues, drps and bonus issues. Rights issue: shareholders cant be made to pay more for their shares than they already have. S5(16): the amount of liability is limited to the amount unpaid, if any, on shares. Drp: rather than receiving cash dividend, can take up cash dividend in shares in the current period. Bonus issues: bonus shares - no cash leaves company. However, some restrictions on directors" and companies" powers exist. Member approval may be required in special circumstances. A public company issues shares (financial benefit) s229(3) to a related party as defined by s228.
