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CIMA Fundamentals of Ethics, Corporate Governance and Business Law BA4 Question # 39 Topic 4 Discussion

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CIMA Fundamentals of Ethics, Corporate Governance and Business Law BA4 Question # 39 Topic 4 Discussion

BA4 Exam Topic 4 Question 39 Discussion:
Question #: 39
Topic #: 4

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?
A.

The issue is lawful as ABC Ltd may issue its shares for a non-cash consideration.

B.

The issue is lawful because ABC Ltd does not need to first offer the new shares to its existing members.

C.

The issue is only lawful if the directors have the necessary authority to issue the shares.

D.

The issue is only lawful if ABC Ltd arranges to have the business valued by the company's auditor.

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Actual exam question for CIMA BA4 exam by Talon9885 at Aug 3, 2025, 12:00:00 AM

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