Capital Raising Methods for Businesses

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Questions and Answers

What are the three methods through which a company can raise capital?

Debt capital, self-funding, and crowdfunding
Debt capital, self-funding, and equity capital (correct)
Debt capital, equity capital, and donation capital
Debt capital, equity capital, and self-funding

What was the outcome of the Trevor v Whitworth case?

The executors claimed a sum of £2,873.12 from the liquidator after the company went into liquidation (correct)
The House of Lords held that the provision authorising the company to purchase its own shares was effective
The executors of Whitworth sold 533 shares to the company for £3,305, the purchase price to be paid within three years from the date of the sale
The company paid the full purchase price to the executors of Whitworth before going into liquidation

What is the purpose of the capital maintenance rule or doctrine?

All of the above (correct)
To avoid directors or majority shareholders reducing the amount payable to creditors before winding up
To ensure that creditors are paid first in the winding up process
To limit the company's ability to distribute dividends

What did Lord Hershell state in the Trevor v Whitworth case?

The rationale of the decision was that the creditors had no right to rely on the capital of the company undiminished by any expenditure outside the limits (D) Signup and view all the answers

What is the Solvency Requirement under the CA 2016?

A statement made by each of the directors that the company satisfies the solvency test in relation to the transaction (B) Signup and view all the answers

What was the provision in the articles of the company in the Trevor v Whitworth case?

The company could purchase its own shares from any person willing to sell it at a price not exceeding the then marketable value thereof (D) Signup and view all the answers

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Description

In this quiz, you will be tested on your knowledge of capital raising methods used by companies. You will learn about the different ways companies can raise capital, including debt capital, self-funding, and equity capital. Additionally, you will explore the rules and restrictions surrounding the usage of equity capital raised from shareholders. Test your knowledge and see how well you understand these essential concepts for businesses.