CISI Introduction to Securities and
Investment Exam
What 2 documents are required to form a company? - Answer -Articles of Association +
Memorandum of Association
Private Company - Answer -A company owned by a person, family, or small group of
investors that does not sell stock to the public. Can have just one shareholder.
Public Company - Answer -Public limited companies (plc's) have a minimum of 2
shareholders and are publicly listed (shares available to the public).
AGM (annual general meeting) - Answer -Held once a year within 6 months of financial
year end. Gives shareholders the opportunity to question the directors about the
company's strategy, planning and goals.
Difference between an Ordinary Resolution and a Special Resolution? - Answer -An
ordinary resolution involves most matters put to the shareholders and requires a simple
majority (51%), whereas a special resolution involves important company decisions so
requires a 75% vote from shareholders.
What is a Corporate Action? - Answer -Any event within a company that affects its
shareholders or bondholders.
Mandatory corporate action and example - Answer -Does not require any intervention
from shareholders or bondholders. e.g. Dividend payment.
Mandatory corporate action with options - Answer -The shareholder has a choice until a
specified date, there is a default option if they do not intervene. e.g. Rights issue.
Voluntary corporate action - Answer -Requires the shareholder/bondholder to
intervene/make a decision. e.g. Takeover.
What is the right to subscribe for new shares? If they don't buy their rights, what else
can they do with them? - Answer -Shareholders have the pre-emptive right to buy any
new shares in the company before they are issued to the public to stop their
proportionate holding being diluted. The benefit is to stop dilution of shares.
Investment Exam
What 2 documents are required to form a company? - Answer -Articles of Association +
Memorandum of Association
Private Company - Answer -A company owned by a person, family, or small group of
investors that does not sell stock to the public. Can have just one shareholder.
Public Company - Answer -Public limited companies (plc's) have a minimum of 2
shareholders and are publicly listed (shares available to the public).
AGM (annual general meeting) - Answer -Held once a year within 6 months of financial
year end. Gives shareholders the opportunity to question the directors about the
company's strategy, planning and goals.
Difference between an Ordinary Resolution and a Special Resolution? - Answer -An
ordinary resolution involves most matters put to the shareholders and requires a simple
majority (51%), whereas a special resolution involves important company decisions so
requires a 75% vote from shareholders.
What is a Corporate Action? - Answer -Any event within a company that affects its
shareholders or bondholders.
Mandatory corporate action and example - Answer -Does not require any intervention
from shareholders or bondholders. e.g. Dividend payment.
Mandatory corporate action with options - Answer -The shareholder has a choice until a
specified date, there is a default option if they do not intervene. e.g. Rights issue.
Voluntary corporate action - Answer -Requires the shareholder/bondholder to
intervene/make a decision. e.g. Takeover.
What is the right to subscribe for new shares? If they don't buy their rights, what else
can they do with them? - Answer -Shareholders have the pre-emptive right to buy any
new shares in the company before they are issued to the public to stop their
proportionate holding being diluted. The benefit is to stop dilution of shares.
