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View the related checklists about Issue of shares

Allotment of shares and disapplication of pre-emption rights—listed company—checklist

Allotment of shares and disapplication of pre-emption rights—listed company—checklist STOP PRESS: A significant restructuring of the UK listing regime came into effect on 29 July 2024, which included the removal of the premium and standard listing segments and the creation of a single listing category for equity shares in commercial companies. The commercial companies category is heavily disclosure-based and sits alongside other listing categories such as the shell companies, secondary listing and closed ended investment fund categories. A new UK Listing Rules sourcebook came into force to implement the changes and the previous Listing Rules sourcebook was revoked. For further information see Practice Note: Reform of the UK listing regime—fundamentals. This Checklist reflects the listing regime as it was prior to 29 July 2024. The allotment and issue of shares is governed by statutory rules, which differ according to the type of company which is proposing the allotment (private or public, listed or unlisted) and whether that company has a single or multiple classes of shares. This checklist sets out...

Tailoring a shelf company limited by shares—checklist

Tailoring a shelf company limited by shares—checklist STOP PRESS: The Economic Crime and Corporate Transparency Act 2023 (ECCTA 2023) received Royal Assent on 26 October 2023. It is intended to enhance corporate transparency in the UK, principally through Companies House reforms and amendments to provisions of the Companies Act 2006. It also seeks to modernise the regulatory framework for limited partnerships and create stronger powers to tackle economic crime. ECCTA 2023 is to come into force in stages. A number of its provisions came into force on 4 March 2024 and may impact this content. For further information, see Practice Notes: Implementation of the Economic Crime and Corporate Transparency Act 2023 and The Economic Crime and Corporate Transparency Act 2023, particularly the legislation and consultation tracker. A person wishing to set up a new company has the following options: • they can incorporate a new company in accordance with the Companies Act 2006 (CA 2006), which is tailored to meet its specific requirements upon incorporation (a tailor-made company), or • they can...

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Flowchart—Interaction of the SSE, share reorganisation and intra-group asset transfer provisions

Flowchart—Interaction of the SSE, share reorganisation and intra-group asset transfer provisions Where companies A, B and C are all in the same capital gains group and company A transfers the shares in company B to company C in exchange for an issue of shares by company C to company A, the following tax consequences may apply to the transaction: • the chargeable gain accruing to company A may be exempt under the substantial shareholdings exemption (SSE) in Schedule 7AC to the Taxation of Chargeable Gains Act 1992 (TCGA 1992). For more information about when the SSE applies to a share sale, see Practice Note: Substantial shareholdings exemption • the share exchange may for tax purposes be deemed not to involve a disposal by company A of its shares in company B, provided the conditions set out in TCGA 1992, s 135 are satisfied and the anti-avoidance condition in TCGA 1992, s 137 does not apply. Where section 135 applies, a modified version of the reorganisation provisions in TCGA 1992, s...

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SEIS—introduction to regime and description of tax reliefs

SEIS—introduction to regime and description of tax reliefs The seed enterprise investment scheme (SEIS) was announced at the Autumn Statement in November 2011 and took effect from 6 April 2012. SEIS was originally introduced for a limited period only but, as announced at Budget 2014, legislation was introduced by Finance Act 2014 to remove the expiry clauses for SEIS relief, making the regime permanent (beyond its original expiry date of 5 April 2017). SEIS allows early-stage, unquoted companies (companies listed on AIM are unquoted for these purposes) that meet certain requirements to raise finance by issuing qualifying shares to qualifying investors. The SEIS regime is heavily based on the EIS regime, the key difference being the requirements are more stringent and targeted at companies in their initial start-up phase. These requirements relate to: • the individual investors (see Practice Note: SEIS—conditions for relief: individual investor conditions) • the issued shares, the funds raised and arrangements in general (see Practice Note: SEIS—conditions for relief: issued shares, the funds...

Table comparing types of share capital

Table comparing types of share capital There are various types of share capital and the main differences are summarised below: Authorised share capital Issued share capital Allotted share capital Generally obsolete from 1 October 2009, as companies no longer need authorised share capital Holders of issued share capital can exercise membership rights Holders of allotted share capital have the unconditional right to be included on the register of members (section 558 of the Companies Act 2006 (CA 2006)) but cannot yet exercise the membership rights However, may still apply to companies (i) incorporated under older legislation or (ii) where shareholders want to limit directors' powers to issue and allot shares, in which case, it means the maximum amount of shares that directors can allot Reflects the point in time when an individual shareholders' name is entered on the company's register of members Reflects the point in time before an individual shareholders' name is entered on the company's register of members Authorised capital = issued shares + unissued...

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Director’s responsibility letter—offeree directors

Director’s responsibility letter—offeree directors To: [name of offeree] (the Company) and its other directors [name of financial adviser] (the Bank) Proposed takeover offer for the Company 1 I, the undersigned, a director of the Company, understand that in connection with the offer [to be] made by the [insert name of offeror] (the Offeror) for [all] the issued [and to be issued] [ordinary] [and preference] share capital of the Company [(such offer to be implemented by means of a scheme of arrangement (Scheme) of the Company) ](the [ Offer OR Acquisition ]), 1.1 [the Offeror will or may issue or publish, or cause to be issued or published (amongst other things): 1.1.1 a document addressed to shareholders of the Company, containing information about the Offer, including full details of its terms and conditions (the Offer Document); 1.1.2 [a prospectus or equivalent document containing details of the issue of shares proposed to be made by...

Directors’ statement—payment out of capital for a redemption of shares

Directors’ statement—payment out of capital for a redemption of shares Company number: [insert number] [insert company name] Limited Payment out of capital to redeem shares in the company Directors’ statement We, the undersigned, [enter name of director] of [enter address] [enter name of director] of [enter address] [enter name of director] of [enter address] being all the directors for the time being of the Company, hereby state in accordance with section 714 of the Companies Act 2006 that the amount of the permissible capital payment for [insert number] [redeemable] shares of £[insert nominal value] proposed in the [Notice of General Meeting dated [insert date] OR Written Resolution dated [insert date]] to be redeemed by the Company is £[insert amount]. We also confirm that, having made full inquiry into the affairs and prospects of the Company, we have formed the opinion: 1 as regards the Company’s initial situation immediately following the date on which the payment out of capital is proposed to be made, that there...

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Does a public company which allots shares as opposed to paying cash as consideration for a target private limited company's shares act in contravention of the Companies Act 2006, s 586?

Does a public company which allots shares as opposed to paying cash as consideration for a target private limited company's shares act in contravention of the Companies Act 2006, s 586? Allotting shares in a public company: In terms of an allotment of shares our Practice Note: Allotment and issue of shares—introductory points provides useful guidance on the issue, including relating to preliminary considerations, payment for shares allotted and post-allotment actions. The preliminary considerations will be relevant as the articles of association of the company may contain any general restrictions in relation to the allotment of shares, and also whether there are pre-emption rights that will apply to the proposed allotment. Depending on whether the public company in question is a listed or unlisted public company, the following two Practice Notes: Allotment and issue of shares—listed public companies and Allotment and issue of shares—private companies with more than one class of share and public unlisted companies may be useful. Both Practice Notes discuss the procedure for...

Can a private company limited by shares carry out a rights issue?

Can a private company limited by shares carry out a rights issue? A rights issue is an offer of shares to existing shareholders of a company, which gives them the right to subscribe for additional shares in proportion to their existing shareholding in the shares of the company, eg, a right for each shareholder to subscribe for one new share for every five shares that they hold. The shares are usually offered to the existing shareholders by means of renounceable letters or other negotiable instruments. If a company wants to raise new capital through an issue of its ordinary shares for cash, it is prima facie obliged by section 561 of the Companies Act 2006 (CA 2006) to do so by means of a rights issue in favour of its existing shareholders. CA 2006, s 561 sets out statutory pre-emption rights and states that a company must not allot equity securities to a person on any terms unless: • it has made an offer to each holder of...

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Corporate weekly highlights—11 April 2024

This week's edition of Corporate weekly highlights includes news of HMRC’s confirmation that capital-raising arrangements (including the issue of shares for non-cash consideration, no consideration, or where consideration is directly received by a third party) are exempt from the 1.5% stamp duty and SDRT charge. Also, the Registrar of Companies and Register of Overseas Entities (Fees) (Amendment) Regulations 2024, SI 2024/454 have been made to correct errors in regulations made earlier this year concerning increases in Companies House fees in connection with the Economic Crime and Corporate Transparency Act 2023.

Share Incentives weekly highlights—11 April 2024

This week's edition of Share Incentives weekly highlights includes (1) HMRC’s confirmation that its official rate of interest will remain at 2.25%, and (2) St James’ Place plc’s remuneration committee reducing its former CEO’s annual bonus to nil following an increase in customer complaints relating to his tenure.