Please enable JavaScript.
Coggle requires JavaScript to display documents.
Shares and share capital (Par value companies (Par value is the minimum…
Shares and share capital
A general principle of company law is that capital, once raised, must be maintained
The issued share capital of a company is the fund to which creditors can look for payment of their debts
Capital is issued by the directors of the company and is represented by the shares which are taken up by the shareholders
CA2006 allows a company limited by shares to alter its share capital in a number of ways which can include
-
-
Consolidating and dividing its share capital into shares of a larger amount than its existing shares
Authorised share capital
The maximum number of shares that could be issued by a company following its incorporation and is shown in the capital clause of its memorandum
No minimum requirement for private limited companies and some of the newer companies may be classed as open ended which means that there is no actual minimum amount specified
The most common authorised share capitals inserted in the articles of association used for non trading private companies are 10,000 shares of £1 each or 50,000 shares of $1 each
-
-
Called up share capital
This is the portion of issued share capital obtained by a company in exchange for capital stock that has not been fully paid for by the shareholders and is called for full payment
Section 547 of CA2006 states that 'called up share capital' means so much of its share capital as equals the aggregate amount of the calls made on its shares (whether or not those calls have been paid), together with
-
Any share capital to be paid on a specified future date under the articles, the terms of allotment of the relevant shares or any other arrangements for payment of those shares
Paid up share capital
-
Paid up capital can be less than a company's total capital because a company may not issue all of the shares that it has been authorised to allot
-
Par value companies
-
-
Par value is important for a bond or fixed income instrument because it determines its maturity value as well as the dollar value of coupon payments
Shares usually no par value or very low par value, such as 1 cent per share
The market price of a bond may be above or below par, depending on factors such as level of interest rates and the bond's credit status
In the case of equity, par value has very little relation to the shares' market price
No par value companies
A no par value stock is a stock that is issued without the specification of a par value indicated in the company's articles of incorporation or on the stock certificate itself
No par value stock prices are determined by what investors are willing to pay for them in the market
Companies find it beneficial to issue no par value stock as they have flexibility in setting higher prices for future public offerings and have less liability to shareholders in the case that their stock falls dramatically
In some jurisdictions such as Guernsey and Jersey, it is possible to form no par value companies. Such companies are formed with no par value shares
-