10-02-2009, 08:19 PM
Dear
I like to refer you to your own quotation of section 90 where you wrote
QUOTE
Section 90 of the CO1984 provides
"A company limited by shares may have different kinds of share capital and classes therein as provided by its memorandum and articles
Provided that different rights and privileges in relation to the different classes of shares may only be conferred in such manner as may be prescribed."
UNQUOTE
It is vital to have in place "prescribed rules" to determine rights and privileges in relation to the different classes of shares. I wish to inform you that such amendment in section 90 dated 30 June 1999 was aimed at to allow classification of preference shares within the definition of share capital. (if you read the text of section 90 before the said amendment, things will be clarified). Since nothing has been "prescribed" for warrants to determine rights and privilidges, in my view, these cannot be issued unless and until we have a statute to support such issuance. Merely amendment in memorandum/artciles will not serve a purpose.
This also has no linkage with section 86. "Share" has been defined in section 2 (35) of CO84 as "a share in the share capital of a company". Only "ordinary shares" and "preference shares" can so far make part of share capital, therefore warrants don't even fall under this umberalla as well.
As far as discount on issuance is concerned, it has almost similar cost to the company and there appears no financial benefit of allowing discount in comparison to paying dividend/interest. Further, it may be very difficult to issue shares/warrants on discount if the company has to make such issue as further issue.
As far as "options" or "call options" discussed by me in earlier post are concerned these were and are not meant for "traded options". These meant the put or call options available to preferencee shareholders in case these are convertible preference shareholders. Therefore, these do have dilutive effect on EPS.
Regards,
KAMRAN.
I like to refer you to your own quotation of section 90 where you wrote
QUOTE
Section 90 of the CO1984 provides
"A company limited by shares may have different kinds of share capital and classes therein as provided by its memorandum and articles
Provided that different rights and privileges in relation to the different classes of shares may only be conferred in such manner as may be prescribed."
UNQUOTE
It is vital to have in place "prescribed rules" to determine rights and privileges in relation to the different classes of shares. I wish to inform you that such amendment in section 90 dated 30 June 1999 was aimed at to allow classification of preference shares within the definition of share capital. (if you read the text of section 90 before the said amendment, things will be clarified). Since nothing has been "prescribed" for warrants to determine rights and privilidges, in my view, these cannot be issued unless and until we have a statute to support such issuance. Merely amendment in memorandum/artciles will not serve a purpose.
This also has no linkage with section 86. "Share" has been defined in section 2 (35) of CO84 as "a share in the share capital of a company". Only "ordinary shares" and "preference shares" can so far make part of share capital, therefore warrants don't even fall under this umberalla as well.
As far as discount on issuance is concerned, it has almost similar cost to the company and there appears no financial benefit of allowing discount in comparison to paying dividend/interest. Further, it may be very difficult to issue shares/warrants on discount if the company has to make such issue as further issue.
As far as "options" or "call options" discussed by me in earlier post are concerned these were and are not meant for "traded options". These meant the put or call options available to preferencee shareholders in case these are convertible preference shareholders. Therefore, these do have dilutive effect on EPS.
Regards,
KAMRAN.
