Brilliant Ltd is a private limited by shares incorporated under Cap. 622. It has firstly issued 5,000 ordinary shares, and subsequently 10,000 8% redeemable preference shares. Both types of shares are issued at $2 each. All monies have been collected for the issued shares. The articles of association of Brilliant states that the preference dividend of the preference shares is to be paid out of yearly profits, and that the holders of the shares only have the right to vote at a meeting of the company when their dividend has not been paid or their rights are being varied.
Brilliant Ltd is a private limited by shares incorporated under Cap. 622. It has firstly issued 5,000 ordinary shares, and subsequently 10,000 8% redeemable
The articles of association of Brilliant states that the preference dividend of the preference shares is to be paid out of yearly profits, and that the holders of the shares only have the right to vote at a meeting of the company when their dividend has not been paid or their rights are being varied.
Brilliant has made substantial profits in the initial years and
(a) Brilliant wishes to pay a 4% dividend to its ordinary shareholders. The directors seek your advice as to whether they can recommend a 4% dividend on all the company’s shares, ordinary and preference. Do the preference shareholders have any right to the dividends in arrears?
(b) The interest rates for borrowing money are currently about 4%. The directors are considering whether Brilliant should redeem its preference shares in full. Advise them.
Step by step
Solved in 2 steps
