Re:Company reconstructions -- Erg Powerlan

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Date Posted: 23:17:24 10/27/02 Sun
Author: anonymous
Subject: Re:Company reconstructions
In reply to: anonymous 's message, "L/E untill mid February to buy shorts back PWR ERG--March 15" on 02:16:40 10/25/02 Fri

Company reconstructions can take many forms, the most common being:
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. Share splits--for example, dividing each $1.00 share into two 50c shares.
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. Consolidations---reverse of this, for example, converting ten 20c shares into one $2.00 share.
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. Capital reductions involving the writing off of capital regarded as permenently lost. As the losses concerned have already taken place, such a paper exercise realy has no further effect on investors, although it can make the payment of dividends out of future profits easier.
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.Reductions involving the share premium account (see para 474), again to make the payment of dividends out of future profits easier.
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Capital reductions involving a partial repayment of capital in cash or through a distribution in specie.
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Schemes of arrangement involving share and or loan securities in one company being exchanged for securities in another company ( a defacto takeover).
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In some cases shareholders affected by such moves need to lodge section 160zzp elections with the Australian Taxation Office to protect their capital gains tax position--see paras 2974 to 2976.
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Capital reductions and schemes of arrangement require 75% majority approvals at general meetings and subsequently the ratification of the move by the court.
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