ACCA Applied Skills · Corporate and Business Law (Global) · Share capital
Brava plc's shareholders hold 40,000 ordinary shares, and the company offers 10,000 new ordinary shares for cash on a pre-emptive basis. Shareholder Anil owns 8,000 shares and takes up his full entitlement. Which number of new shares was Anil entitled to?
Anil was entitled to 2,000 new shares. The offer is 10,000 new shares for 40,000 existing, a one-for-four ratio, so his 8,000 shares entitle him to 2,000 under pre-emption rights.
- A2,000Correct
- B1,250
- C2,500
- D8,000
Explanation
Offer ratio is 10,000 new to 40,000 existing, i.e. 1 for 4. Anil with 8,000 shares is entitled to 8,000 ÷ 4 = 2,000. 2,500 wrongly uses 10,000 ÷ 4, and 1,250 wrongly divides 10,000 by 8.
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