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Shares - Coggle Diagram
Shares
Reducing Share Capital
Reasons for reducing capital and what exactly can be reduced?
A company may wish to reduce its share capital for various reasons
Return surplus capital to shareholders
Release liabilities on partly paid shares
Increase distributable reserves to pay dividends or to buy back its own shares
Allotment of shares and pre-emption rights
What are the Steps
Step 1
Is there are limit on the shares that can be issued?
Check-> Is there a limit on the shares that can be issued?
Step 2
Does the board have authority to allot the shares? s550-551
CA 1985- Pre October 2009 company= limit ORDINARY RESOLUTION to remove it.
Post 2009 companies... MA contains no restrictions.... If the company has a tailored cap then a Special Resolution is required to remove or raise it...
Step 3
Check? Are there any pre-emption rights?
If there are pre-emption rights in the Articles or an SHA- Follow the relevant provisions... If there are no tailored pre-emption rights, the statutory pre-emption s.561 will apply if: (1) Shares are 'ordinary' (2) Consideration is 'fully in cash' (3) Not excluded or disapplied
Where pre-emption rights are applicable, the company can take any of the following steps. Option 1- Offer shares to the existing members in proportion to their current shareholding on terms at least as favourable (offer must be open for >14 days Option 2- Each shareholder to sign a Letter of Waiver Option 3- Disapply pre-emption rights s.569 by Special Resolution
Step 4
Procedure of allotment of shares
1) BM/Resolutions- Where a shareholders' approval is NOT required--> Resolve to allot the new shares complying with pre-emption rights if necessary. Where shareholders' approval is required. Resolve to seek the members' permission to allot the shares and/or where required, disappyl the pre-emption right.
Step 5
Admin matters
Certificates Issue new share certificates to allottee (within 2 months)
Records update the Register of Members (within 2 months) and Register the Allotment (if one is kept) and update the Register of PSC- if affected (within 14 days). The nominal value of shares should be credited to the capital reserve and the premium must be transferred to the Share Premium Account
Shares Buyback
Share Transfer
Reducing Share Capital