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In question June 2012, ENNEA CO,
for part (A), in proposal A, company increase their level of debt and use that funds to buy back the shares from shareholders and hence share capital has reduced by $20m.
Does it mean that if company has sufficient funds ( assuming) to buy all shares of the company from shareholders, then when we see the annual report in the financial statement section, the share capital will be 0 ?
sorry let me re-write the question,
In question June 2012, ENNEA CO,
1. for part (A), in proposal 1, company increase their level of debt and use that funds to buy back the shares from shareholders and hence share capital has reduced by $20m.
Does it mean that if company has sufficient funds ( assuming) to buy all shares of the company from shareholders, then when we see the annual report in the financial statement section, the share capital will be 0 ?
2. Moreover in the proposal 3 when we look at the answer, in the non current liabilities portion, i’m not sure why 27,000 is deducted in the non current liability portion…
1. Legally there would no longer be a company if there were no shares!
2. Because the question says for proposal 3 that the funds raised from the sale of the non-current assets will be used to reduce the company’s debt.
1. then theoretically, if the company owns their own shares 99% while outside shareholder owns 1%, then they will have very small amount of ordinary share capital ? ( just assuming it generally)
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