Acid test ratio:

A term used to measure the short-term ability of a business to meet its obligations. It is calculated as current assets, less stocks and work in progress, divided by current liabilities (also known as Quick ratio).

 

Administrative receiver:

Appointed by a creditor under a specific power arising under the terms of a fixed or floating charge. The receiver’s duty is to realise the value of the asset charged for the benefit of his creditor/client. A company can continue to trade while in receivership but it cannot prevent a petition for its winding-up being presented to the court. An administrative receiver must be an insolvency practitioner.

 

Agent:

A person authorised expressly or by implication to act for another, called the principal, who is, as a result of the authority delegated by him, bound by the acts of the agent.

 

Annual return:

By law, a limited company must each year draw up an annual summary of its capital and shares, together with an up-to-date list of directors and members (shareholders) with their names, addresses and number of shares held, occupation and other directorships of a director and statement of the indebtedness of the company in respect of secured charges.

 

Associated companies:

Companies which by some common link or bond are considered Associated. The most common occurrence is directorate associations.

 

Authorised Capital:

This is the amount of money that can be put into a Public company in the form of shares. For a Limited or Unlimited Company this is known as Nominal capital (the term Registered capital is also sometimes used.)

 

Auditors report:

A statement from the auditors (accountants) that they have examined a business’ books of accounts to check whether they have been properly kept and whether they represent a true and fair view of the company’s trading.

 

Bad debt:

Money owed to a company which is not recoverable and therefore written off as a loss.

 

Bad debt ratio:

A comparison between total sales and those for which payment is not recoverable and therefore written off as losses.

 

Balance sheet:

A statement showing the assets and liabilities of a business at a certain date. The balance sheet forms part of the accounts of a company, and is normally prepared annually.

 

Bank reference:

The information returned as a result of a written request which is sent to the applicant’s bank asking for its opinion regarding the financial standing of the applicant. The response can take one or two weeks to be received and will be couched in predefined phraseology.

 

Bankruptcy:

A person is declared bankrupt by a Court which may happen at his own request or as a result of action taken by a creditor. A receiver will be appointed and assets be realised as effectively as possible.

 

Behaviour scoring:

A scoring system for assessing the continued risk on an existing loan account. The score is recalculated regularly (typically monthly) and is used in both collections and marketing activities.

 

Bill of Exchange:

Defined by Bills of Exchange Act 1882,s. 1 as an unconditional order in writing, addressed by one person (the drawer) to another (the drawee and afterwards acceptor), signed by the person giving it, requiring the person to whom it is addressed to pay on demand, or at a fixed or determined future time, a sum certain in money to, or to the order of, a specified person or to bearer (payee).

 

Bill of lading:

A receipt from a carrier given to a shipper or consignor, undertaking to deliver the goods upon payment of the freight, to the person described in the bill. The delivery of this document to the consignee is sufficient to transfer property in the goods. It is a document of title and a document of carriage.

 

Borrowing ratio:

A ratio which shows total debt as a percentage of shareholders’ funds, and aims to measure to what extent the subject is financed by external funds.

 

Capital fully employed:

The company’s resources are fully extended; shortage of cash. This is one of the terms used by banks when answering status enquiries.

 

Cash:

Cash in hand, either petty cash or current accounts at the bank.

 

Cash flow:

The regular receipt of money to cover outgoings fully.

 

CCA:

Consumer Credit Association.

 

CCA:

Consumer Credit Act, 1974

 

CCJ:

An abbreviation for County Court Judgment

 

CCTA:

Consumer Credit Trade Association

 

Certificate of incorporation:

When a new Limited company (or Unlimited company) is being formed and all the formalities complied with to the satisfaction of the Registrar of Companies, he will issue a Certificate of Incorporation which then gives the Company its legal existence.

 

Charging order:

A form of proceedings to enforce a judgment, which attaches to property, normally land or shares, owned by the debtor. The charging order operates like a mortgage in that it is usually used to secure payment by instalments. Upon default an order for sale may be made.

 

C.O.D:

Cash on delivery; payment is due upon delivery of the goods.

 

Collateral security:

Security in the form of stocks and shares, deeds of property or other acceptable substitutes which are deposited by a borrower as a guarantee that a loan will be repaid.

 

Company number/Company index number/Company Registration Number:

When a Limited company is formed it is given a Company Number, individual to itself, which it keeps, even if it changes its name, until it is dissolved. All companies are required by law to show this number on their letter headings.

 

Compound interest:

Interest calculated on the principal sum of a debt, plus any interest that has accrued in previous periods. Each time interest is added, the total becomes the new sum on which subsequent interest is calculated.

 

Conditions of sale:

The contractual terms, usually in writing, upon which goods are sold and services supplied. Also known as Terms of Trade and Terms and Conditions.

 

Contractual interest:

Interest on late payment as stipulated in a seller’s contract with the debtor. The seller should decide the rate of interest and credit period for the debtor, and should obtain agreement from the debtor to meet these terms. A seller may be challenged in a court of law if either the rate of interest or the length of the credit period are deemed unreasonable. See also Statutory Interest.

 

Consortium:

Usually a group of companies or firms working together on a project too large or complex for a single company to undertake; or several concerns forming a temporary joint organisation in order to achieve a common goal.

 

Controlling interest:

A company is said to have a controlling interest in another company when it holds over 50% of the shares carrying voting rights.

 

County Court:

The County Courts, since June 1991, have had jurisdiction to hear all liquidated claims. From 26 April 1999, under the new Civil Procedure Rules, there are different procedures applicable to claims, depending on their value, as follows:

 

1. small claims track: covering all claims up to £5,000

2. fast track: covering all claims between £5,000 and £15,000

3. multi-track: covering all claims above £15,000

 

County Court Judgments:

A concern or person may take another to Court for non-payment of debt, and judgment will be given in many cases against the claimant (the party bringing the action). A County Court Judgement is given for a particular amount, which may be for all or part of the original claim. In England and Wales, the County Courts are used for many of these cases.

 

Court appointed receiver:

In certain circumstances the court may appoint a receiver to execute a judgment or to protect property, which is subject to a dispute. The receiver appointed by the court must comply with the order of the court in which his powers and duties will be defined. A court appointed receiver is an officer of the court and not an agent of the company or a creditor and will be personably liable on contracts entered into in the execution of his functions.

 

Credit:

The word ‘credit’ is derived from the latin word ‘Credo’, its meaning being ‘I believe’. Credit is the power to obtain finance, materials on trust by promising to pay for them at some definite time in the future.

 

Credit insurance:

Insurance against bad debts. This form of insurance has expanded since it became the practice for the insured to accept liability for an agreed portion of the debt, as otherwise there would be little to inspire the creditor to hurry the debtor for payment.

 

Credit reference:

The information returned as a result of an enquiry to a credit reference agency. Information will be compiled from the electoral roll, CCJ data and commercial enquiries.

 

Credit scoring:

A method that assigns a ‘score’ to various attributes of a potential debtor for assessing statistically the likelihood that credit will be repaid punctually.

 

Current assets:

Cash or other assets readily convertible into cash (e.g. stocks, debtors, short term investment).

 

Current liabilities:

Amounts which fall due for payment within 12 months of the Balance Sheet date (e.g. creditors, bank overdrafts, current taxation, etc.).

 

Current ratio:

A calculation made to show the liquidity of a business. Obtained by dividing current assets by current liabilities. The higher the ratio, the greater the protection for the trade creditors.

 

Cut-off score:

That score which represents the boundary between accepting and rejecting an application for credit. This figure is movable and is determined by the credit grantor.

 

Days Sales Outstanding:

See D.S.O.

 

Debenture:

A document recording the indebtedness of one party to the other, containing a promise to repay and, by way of security for that promise, a floating charge over a company’s assets.

 

Debt collection agency:

A company which operates a debt recovery service for the recovery of overdue accounts, on behalf of clients.

 

Decree:

Scottish equivalent of an English Judgment.

 

Discretionary limit:

Under credit insurance this is the maximum amount of business that can be transacted with any one buyer without the formal approval of the insurer, subject to satisfactory credit references being obtained.

 

Dividends:

The return paid to shareholders on their investment. (Usually in the form of a bonus payment every six months).

 

Document of title:

A document enabling the person in possession of it to deal with the property described in it in any way as if they were the owner.

 

Dormant company:

A limited company that has never started, or has ceased, its trading activities (e.g. a subsidiary transferring its business to its parent or a fellow subsidiary), but has not been dissolved. Annual returns are still filed, but the accounts state that the company did not trade during the year. A company is kept on the "live index" in this way, so that it can be easily reactivated if it wants to start trading again in the future. It is also known as a Shell company.

 

D.S.O.:

Days sales outstanding; an average guide to the length of time it takes a company to receive payment for goods sold. It is a measurement obtained by calculating the number of days’ or months’ sales that are owed to the company.

 

Due from group companies:

Amounts due from group companies within the next 12 months e.g. repayment of a short-term loan.

 

Earnings report/statement:

A business financial statement that lists revenues, expenses, and net income throughout a given period. Because of the various methods used to record transactions, the monetary values shown on an income statement often can be misleading. Also known as Profit and loss statement, Operating statement, or Income statement.

 

Enforcement:

Once a debt has been sued for successfully and judgment entered against the debtor there are various methods of physically recovering the money and those are enforcement methods. Examples are instructing bailiffs to levy execution, charging orders, attachment of earnings, Third Party Debt Orders.

 

Factoring:

Factoring is a financial service by which a concern operating as a "Factoring House" or "Factoring Agency" will buy outright the debts of a client. The latter is then relieved of losses it may incur because of slow payment or financial difficulties of a customer and the trouble of collecting outstanding accounts.

 

Firm:

A business unit formed for the purpose of carrying out some kind of trading activity. The term "firm" is used in many ways, but the correct meaning is a business carried on under a trading style by partners. Many people use the term "firm" to embrace any business, i.e., Private Limited and Public Limited companies but this is technically incorrect.

 

Fixed assets:

Tangible and intangible assets with a relatively long life, acquired to produce goods or services and not intended for resale. Includes financial assets such as trade investments.

 

Fixed charge:

A charge over a specific asset or type of asset, e.g. machinery, property, book debts, etc.

 

Fixtures/equipment:

The current book value of fixtures and fittings after allowing for depreciation.

 

Floating charge:

A charge created by a company over all company assets for the time being. The lender has no immediate right over the assets but upon crystallisation of the charge he or she can enforce against any or all of the assets covered by the charge.

 

Gearing:

Accounting ratio of money borrowed compared with unencumbered capital. A company is said to be highly geared if a high proportion of their working capital is borrowed rather than invested.

 

Generic scorecard:

A scorecard which has been designed rather than statistically derived. These usually apply in situations where there is no (or insufficient) data available from which to develop a statistical scorecard. This is typically for new product launches. Also known as Start-up scorecards.

 

Goodwill/intangibles:

Goodwill only features in a company’s balance sheet after it has made an acquisition. It represents the excess of the purchase price over the net worth of the acquisition and is depreciated on the balance sheet over a five-year period. Intangibles include such items as patents, trademarks, formulae etc. and represent the value determined by the Directors for these items.

 

Gross profit:

Net sales less costs.

 

Guarantee:

A promise by one person to carry out the contractual commitments of another in the event of default. Must be in writing.

 

Holding company:

A company formed for the purpose of exercising financial control over a number of operating companies by buying up all or the majority of their shares. A company has a controlling interest in another when it has acquired over 50% of its issued shares which have voting rights. It also has control over the composition of the board of directors of the subsidiary company.

The company having the majority interest in another is also referred to as the Parent company

 

Income statement:

A business financial statement that lists revenues, expenses, and net income throughout a given period. Because of the various methods used to record transactions, the monetary values shown on an income statement can often be misleading. Also known as Earnings report, Earnings statement, Operating statement, or Profit and loss statement.

 

Indemnity:

A promise to compensate another for a wrongdoing, expense or loss incurred. To be distinguished from a guarantee which relates to the obligations of another and may not be a primary obligation.

 

Insolvency:

An inability to pay debts as they fall due, or where a debtor’s total assets are exceeded by his or her liabilities. The law in this area is regulated by the Insolvency Act 1986. To be declared insolvent, debts due to a creditor or creditors should be in excess of £750.

 

Intangible assets:

Patents, trademarks, goodwill etc.

 

Interest expenses:

Any interest charges incurred, normally shown as a net figure after deduction of any interest received.

 

Intermediate assets:

Assets more usually found in a balance sheet under fixed assets but could include:

 

* Investments in, and amounts due from subsidiaries (Gross).

* Investments in, and amounts due from related companies (Gross).

* Trade Investments (Gross).

* Other listed and unlisted investments e.g. shares in a racehorse, which are not part of the business cycle of the company.

* Investment properties (where property dealing is not an integral part of the activities of the company).

 

Investments:

Money invested in associated companies or any other long-term investment. Usually stated "at cost", with market value also mentioned.

 

Joint venture:

A partnership set up between two or more companies, usually joining specific areas of their activities together, and usually to enhance their capabilities and competitiveness in particular areas or markets or to undertake a specific project.

 

Joint and several:

When two or more persons declare themselves jointly and severally bound they make themselves liable to a separate and individual action as well as joint action in the event of default. If one person is pursued for the whole debt he can claim a contribution from the others.

 

Joint-stock company:

This is a company that is quoted on the Stock Exchange and whose shares are owned by members of the public.

 

Judgment:

An abbreviation for County Court Judgment. A concern or person may take another to Court for non-payment of debt, and judgment will be given in many cases against the claimant (the party bringing the action). A County Court Judgment is given for a particular amount, which may be for all or part of the original claim. In England and Wales, the County Courts are used for many of these cases.

 

Late Payment of Commercial Debts (Interest) Act 1998:

This Act was introduced to encourage purchasers to pay on time by giving businesses the right to claim statutory interest if another business pays its bills late. For debts pertaining to contracts made between 1st November 1998 and 6th August 2002, the legislation is referred to as the Late Payment of Commercial Debts [Interest] Act 1998. For debts pertaining to contracts made on or after 7th August 2002, the legislation is referred to as the Late Payment of Commercial Debts [Interest] Act 1998, as amended and supplemented by the Late Payment of Commercial Debts Regulations 2002

 

Law of Property Act Receivership (LPA):

An LPA receiver is appointed by a lender who has a fixed charge over the property under the statutory power given in section 109 Law of Property Act 1925. The powers of the LPA receiver are as follows:

 

* To demand and recover rent;

* To give receipts for income;

* To insure any property against loss or damage;

* To grant a lease over the property at the best reasonably obtained rent;

* To accept a surrender of a lease in order to grant a new lease;

* In a well-drafted mortgage the above powers are extended and would allow the receiver to take control of the property and act as he/she considers fit with the consent of the mortgagee.

 

Leveraged buy-out:

Where the ownership of a company changes through a party or number of parties acquiring the controlling interest of the company using borrowed funds, giving the assets of the company as security. Repayment is made using future trading profit. Some consultancy firms are beginning to specialise in this area.

 

Limited company:

A company in which the liability of the members in respect of the company’s debts is limited. It may be limited in shares, in which case the liability of the members on a winding-up is limited to the amount (if any) unpaid on their shares. This is by far the most common type of registered company. The liability of the members may alternatively be limited by guarantee; in this case the liability of the members is limited by the memorandum to a certain amount which the members undertake to contribute on winding-up. The latter are usually societies, clubs, or trade associations. Since 1980 it has not been possible for such a company to be formed with a share capital, or converted to a company limited with a share capital. It is a popular form of company, because if the company becomes insolvent the winding-up of the company will not bankrupt any of the members.

 

Limited liability:

The liability of shareholders in a limited liability company, private or public, is limited to the face value of the shares held. If therefore, the shares are fully paid, the shareholder has no liability for the debts of the company. If the shares are partly paid, the liability is limited to the unpaid (face) value of the shares.

 

Limited liability company:

Another term for a limited company.

 

Limited liability partnership:

A limited liability partnership is a general partnership that has been registered with the Secretary of State as a limited liability partnership. A partner is not liable for professional malpractice that does not involve that partner.

 

Liquidation:

The term used to describe the winding up of a company, usually by reason of an inability to pay its debts, regulated by the Insolvency Act 1986. It involves the realisation of the company’s assets and the distribution of any proceeds to its creditors.

 

Liquidator:

The insolvency practitioner duly appointed to wind up and settle the affairs of a company being wound-up.

 

Liquidity:

The excess of liquid assets over liquid liabilities.

 

London Gazette:

This is an official British Government publication. In addition to containing information such as official Government announcements, it also lists details of bankruptcy proceedings, dissolutions of partnerships, winding-up orders against companies, notices under Section 652 of the Companies’ Act, Voluntary liquidations, etc.

 

Long firm:

A term used to describe a swindling organisation, in business for the purpose of obtaining goods on credit, selling the proceeds, (frequently under cost) and then absconding or failing, without having paid.

 

Long-term debt:

Amounts not falling due for payment within 12 months of the balance sheet date. This is a long-term liability.

 

Minority interest:

The claim on a company’s assets due to a minority shareholder/s, can include proposed dividends as yet paid or claimed. (Normally included as a long term liability).

 

MIS:

Management Information Systems

 

MMC:

Monopolies and Mergers Commission

 

Net income/Net loss:

Profit (or loss) after tax less extraordinary items.

 

Net worth:

Indicates the financial strength of a company and comprises:

 

* Issued capital

* Share premium A/C

* Capital reserves

* Any general reserves

* Profits and losses etc. (revenue reserves)

* Grants, donations etc.

 

Net worth is calculated as: total assets (not including fictitious assets) minus current and long-term liabilities (also known as net assets).

Many credit managers place more importance on tangible net worth, i.e. net worth less any intangibles such as goodwill, formation expenses, patents, etc. In simple terms net worth can be described as what would belong to the shareholders if a company were to cease trading, turn all assets into cash and settle all liabilities (assuming that the balance sheet figures would translate into the actual cash figures represented).

 

Nominal Capital:

This is the amount of money that can be put into a Limited or Unlimited company in the form of shares. For Public companies this is known as Authorised capital. The term Registered capital is also sometimes used. Nominal capital is divided into shares which can be of different classes and values. Different classes of shares may carry varied voting rights, divided rights etc.

 

Official Receiver:

The official receiver is an officer of the court and Civil Servant employed by the insolvency service to manage bankruptcies and compulsory company liquidations. The term "Official Receiver" should never be confused with the administrative receiver appointed by debenture holders etc.

 

Operating income (Loss):

Gross profit or loss less selling/administrative expenses, payroll, depreciation/amortisation, etc.

 

Operating statement:

A business financial statement that lists revenues, expenses, and net income throughout a given period. Because of the various methods used to record transactions, the monetary values shown on an income statement often can be misleading. Also known as profit and loss statement, earnings report, earnings statement or income statement.

 

Ordinary shares:

These generally carry no fixed rate of dividend, unless they are deferred ordinary shares. They may receive a dividend, in accordance with the amount of net profit made by the company (or deriving from previous years’ profits retained in the business) but these days many private companies do not pay dividends, retaining all the profits for the business.

 

Other current assets:

Includes Bills of Exchange, bank certificates, taxation, recoverable.

 

Other current liabilities:

Including hire purchase agreements, proposed dividends, sundry deposits, social security payments, National Insurance payments etc.

 

Other income:

Income other than that from the sale of goods or services e.g. investments.

 

Parent company:

A company that owns or controls subsidiaries by buying up all or the majority of their shares. A company has a controlling interest in another when it has acquired over 50% of its issued shares which have voting rights. Where a parent company does not operate in its own right, it is called a holding company.

 

Partnership:

A type of business unit in which two or more persons join together to carry on some form of business activity. In what is termed an Ordinary or General partnership, all the partners jointly share the management of the business though their percentage of profits made is normally in proportion to the amount they have invested as capital into the business. All ordinary or general partners are responsible jointly and severally for all the debts and obligations of the business, up to the full value of their personal belongings (with certain minor exceptions). Another name for a partnership is a "firm". See also, Limited liability partnership.

 

Preference shares:

These normally carry a fixed rate of dividend which is paid before the dividend on Ordinary shares. There are many types of preference shares, such as non-cumulative, cumulative, redeemable, etc. Preference shares sometimes do not carry voting rights.

 

Prepaid expenses:

Rates, rent, insurance premiums, etc. normally payable in advance.

 

Private Company:

A private company is any registered company that is not a public company. The shares of a private company may not be offered to the public for sale. The legal requirements for such a company are less strict; for example, there is no minimum issued or paid-up share capital requirement and small and medium-sized companies need not file full accounts.

 

Profit (loss):

Profit is the excess of income over expenses. Loss is the excess of expenses over income.

 

Profit and loss statement:

A business financial statement that lists revenues, expenses, and net income throughout a given period. Because of the various methods used to record transactions, the monetary values shown on an income statement often can be misleading. Also known as Earnings report, Earnings statement, Operating statement, or Income statement.

 

Profit Margin:

A measurement of trading success – the calculation of profit as a ratio to (a)net sales (b) capital.

 

Pro forma:

Can be:

 

* An invoice drawn up by seller and sent to the buyer to confirm the details of a contract;

* A polite reminder that a debt will be due for payment;

* For despatch to an agent when goods are sent on consignment basis;

* By an exporter to show charges e.g. packing, freight etc.

 

Proprietor:

Individual ownership or sole proprietorship; it is the type of business unit in which only one person is liable. It is the simplest form of business organisation. The owner is responsible for all management decisions, takes all the profits and bears all the losses. His liability is unlimited, and not only his business assets, but the whole of his private belongings (with certain minor exceptions) can be taken from him to satisfy business debts.

 

Public Limited Company:

A company registered under the Companies Act (1980) as a public company. Its name must end with the initials `plc'. It must have an authorized share capital of at least £50,000, of which at least £12,500 must be paid up. It may offer shares and securities to the public. The regulation of such companies is stricter than that of private companies. Most public companies are converted from private companies, under the re-registration procedure in the Companies Act.

 

Public record information:

Information obtained on business concerns etc. from sources generally available to any person who may be interested in such information. The sources of this type of information are, for example, the Register of County Court Judgments and the London Gazette.

 

Quick assets:

Assets held in cash or in something that can be readily turned into cash (e.g. deposits in bank current account, trade debts, marketable investments). The ratio of these assets to current liabilities provides an assessment of an organisation’s liquidity or solvency.

 

Quick ratio:

A term used to measure the short-term ability of a business to meet its obligations. It is calculated as current assets less stocks and work in progress, divided by current liabilities (also known as Acid test ratio).

 

Receivership:

There are three types of receivership:

 

An administrative receiver who is appointed by a debenture holder under a fixed or floating charge debenture;

 

A law of property Act receiver who is appointed over property under The Law of Property Act 1925;

 

A Receiver appointed by the Court. (This is rarely used in practice).

 

The term ‘Official Receiver’ should not be confused with ‘administrative receiver’. The latter is appointed by debenture holders etc. The former is an employee of The Insolvency Service (an executive agency of the Department of Trade and Industry).

 

Red lining:

The practice of declining an applicant for credit wholly on the grounds that he/she lives at an address which is deemed to be unsatisfactory. This practice is outlawed by the Office of Fair Trade. (The name derives from the original practice of drawing a red line around an address on a map.)

 

Registered capital:

Is the amount of money that can be put into a Limited or Unlimited company in the form of shares. The term Nominal capital is also sometimes used. For Public companies this is known as Authorised capital.

 

Registered capital is divided into shares which can be of different classes and values. Different classes of shares may carry varied voting rights, divided rights etc.

 

Registered company:

A registered company is registered under the Companies Act, with the Registrar of Companies. A company may be registered either as limited private company, a public limited company or an unlimited company. See also, Private company.

 

Registered office:

The address of a company at which all documents must be served, in order for service to be effective. It is recorded at Companies House and can be found by referring to company headed paper or carrying out a company search.

 

Reserves:

The value of net assets over and above the issued capital.

 

Reservation of title clause:

Also known as a Romalpa clause or a Retention of title clause it is a clause reserving the seller’s title to the goods until those goods are fully paid for. It imposes a duty of care in respect of the goods on the buyer and purports to entitle the seller to recover the goods or trace the proceeds of sale. This is a complex area, and any company wishing to incorporate such a clause into its contracts/terms and conditions, should seek specialist legal advice.

 

Retained earnings:

Also known as the P& L account or revenue reserves, represents the accumulated net income, not paid out as dividends etc, from previous financial years, and not transferred to the other reserves, and carried forward to the balance sheet. Retained earnings form part of a company’s net worth.

 

Retained earnings at end:

The accumulated income, not paid out as dividends etc., carried forward to the current years’ balance sheet.

 

Retention of title clause:

Also known as a Romalpa clause or a Reservation of title clause it is a clause reserving the seller’s title to the goods until those goods are fully paid for. It imposes a duty of care in respect of the goods on the buyer and purports to entitle the seller to recover the goods or trace the proceeds of sale. This is a complex area, and any company wishing to incorporate such a clause into its contracts/terms and conditions, should seek specialist legal advice.

 

Return of allotments:

When a company commences operations it will not normally be in the position to file an annual return. Therefore if the persons forming the company want to take up and pay for shares, they make what is called a return of allotments, a simple form showing how many shares have been allotted and the names and addresses of the allottees. A company which increases its issued capital between filing annual returns, normally issues further shares by making such an allotment.