BFA726, Corporate Law and Regulation 25
Tutorial 9 – Week Commencing 23/09/2013 (Covers material from Chapters 19 & 20) Question 1
Should a company be allowed to pay a dividend to its shareholders even if the company's net assets fluctuate over time?
Spec Pty Ltd (Spec) is a property development company. It owns parcels of rural and semi-rural land in Victoria. Bill owns 80% of the shares in Spec and controls the composition of its board. Last year the company made a small trading loss, but it owns a large area of land with a frontage to the Gold Coast which is valued in the company's balance sheet at $10 million but which is expected to be worth at least $25 million when it is developed as a golf course resort. Bill needs cash for another project in which he is involved. He wants the board to revalue the land at $25 million and then to distribute the $15 million “excess” to the shareholders in the form of a dividend. Advise the directors of Spec:
(a) whether they can comply with Bill's wishes without breaching the Corporations Act; and (b) what guidelines should they follow in making their decision? Question 3
What is the difference between circulating and non-circulating assets? Tutorial 10 – Week Commencing 22/09/2014 (Covers material from Chapters 21 & 22) Question 1
“Chapter 6D provides for effective regulation of profit forecasts and future predictions which are contained in a company’s prospectus.”
Do you agree with this statement? Are there any circumstances where a company may be held liable for “blue sky” predictions which are contained in a disclosure document? Question 2
ATT Ltd, a biopharmaceutical company, has lodged a prospectus with ASIC intending to raise $100 million from investors. The aim of capital raising is to allow the company to develop its range of research and development products. In the company’s prospectus ATT Ltd has provided for forecast earnings/losses for the next three years as follows: $15...
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