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Facts: shares in a company which had a nominal value of £1 were trading at a market price of 12.5p.in an honest attempt to refinance the company,new £1 preference shares were issues and credited with 75p as paid up.the company subsequently went into liquidation
Held:the holders of the shares were required to pay further 75p per share.Sir Please help me.. i didnt get that
Company is trading below nominal value…
Why holders are required to pay 75p only?It looks to me like you have mis-typed something here! Or omitted to give me full information
It is against the law to issue shares for an amount that is lower than the face value of those shares
Thus, a $1 preference share cannot be issued for lower than $1
In the situation that you have given me, if the 75 cents still payable is correct, then the amount received on issue would be only 25 cents
If the 75 cents credited as paid up is correct, then the amount still to be paid would be 25 cents
The market value of the ordinary / equity shares of $.125 is totally irrelevant to the issue of these new preference shares
OK?
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