ACCA Applied Skills · Corporate and Business Law (Global) · Share capital
Marlow Co has 100,000 ordinary shares in issue. Anita holds 20,000 of them. Marlow proposes to issue 50,000 new ordinary shares for cash, and pre-emption rights apply with no disapplication. How many of the new shares must be offered to Anita first?
Anita must be offered 10,000 shares. She owns 20% of the company, and pre-emption requires the new issue of 50,000 shares to be offered pro rata to existing holdings, so her share is 20% of 50,000.
- A10,000 sharesCorrect
- B20,000 shares
- C5,000 shares
Explanation
Anita holds 20% (20,000/100,000). Her pro rata entitlement is 20% x 50,000 = 10,000 new shares. Offering 20,000 would confuse her existing holding with the offer entitlement, and 5,000 would be an incorrect proportion.
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