ABC Ltd has resolved to purchase the business of ST Ltd for £500,000. ABC Ltd is to pay ST Ltd for the business by issuing ordinary £1 shares rather than cash. As the market value of ABC Ltd's shares is £5 per share, ABC Ltd is to issue to ST Ltd 100,000 ordinary £1 shares. Which of the following is incorrect?
- The issue is lawful as ABC Ltd may issue its shares for a non-cash consideration.
- The issue is lawful because ABC Ltd does not need to first offer the new shares to its existing members.
- The issue is only lawful if the directors have the necessary authority to issue the shares.
- The issue is only lawful if ABC Ltd arranges to have the business valued by the company's auditor.
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