Office of Public Sector Information
(1) In the Companies Acts “share”, in relation to a company, means share in the company’s share capital.
(2) A company’s shares may no longer be converted into stock.
(3) Stock created before the commencement of this Part may be reconverted into shares in accordance with section 620.
(4) In the Companies Acts—
(a) references to shares include stock except where a distinction between share and stock is express or implied, and
(b) references to a number of shares include an amount of stock where the context admits of the reference to shares being read as including stock.
The shares or other interest of a member in a company are personal property (or, in Scotland, moveable property) and are not in the nature of real estate (or heritage).
(1) Shares in a limited company having a share capital must each have a fixed nominal value.
(2) An allotment of a share that does not have a fixed nominal value is void.
(3) Shares in a limited company having a share capital may be denominated in any currency, and different classes of shares may be denominated in different currencies.
But see section 765 (initial authorised minimum share capital requirement for public company to be met by reference to share capital denominated in sterling or euros).
(4) If a company purports to allot shares in contravention of this section, an offence is committed by every officer of the company who is in default.
(5) A person guilty of an offence under this section is liable—
(a) on conviction on indictment, to a fine;
(b) on summary conviction, to a fine not exceeding the statutory maximum.
(1) Each share in a company having a share capital must be distinguished by its appropriate number, except in the following circumstances.
(2) If at any time—
(a) all the issued shares in a company are fully paid up and rank pari passu for all purposes, or
(b) all the issued shares of a particular class in a company are fully paid up and rank pari passu for all purposes,
none of those shares need thereafter have a distinguishing number so long as it remains fully paid up and ranks pari passu for all purposes with all shares of the same class for the time being issued and fully paid up.
(1) The shares or other interest of any member in a company are transferable in accordance with the company’s articles.
(2) This is subject to—
(a) the Stock Transfer Act 1963 (c. 18) or the Stock Transfer Act (Northern Ireland) 1963 (c. 24 (N.I.)) (which enables securities of certain descriptions to be transferred by a simplified process), and
(b) regulations under Chapter 2 of Part 21 of this Act (which enable title to securities to be evidenced and transferred without a written instrument).
(3) See Part 21 of this Act generally as regards share transfers.
References in the Companies Acts to a company having a share capital are to a company that has power under its constitution to issue shares.
(1) References in the Companies Acts—
(a) to “issued share capital” are to shares of a company that have been issued;
(b) to “allotted share capital” are to shares of a company that have been allotted.
(2) References in the Companies Acts to issued or allotted shares, or to issued or allotted share capital, include shares taken on the formation of the company by the subscribers to the company’s memorandum.
In the Companies Acts—
“called-up share capital”, in relation to a company, 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 paid up without being called, and
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; and
“uncalled share capital” is to be construed accordingly.
In the Companies Acts “equity share capital”, in relation to a company, means its issued share capital excluding any part of that capital that, neither as respects dividends nor as respects capital, carries any right to participate beyond a specified amount in a distribution.
(1) The directors of a company must not exercise any power of the company—
(a) to allot shares in the company, or
(b) to grant rights to subscribe for, or to convert any security into, shares in the company,
except in accordance with section 550 (private company with single class of shares) or section 551 (authorisation by company).
(2) Subsection (1) does not apply—
(a) to the allotment of shares in pursuance of an employees' share scheme, or
(b) to the grant of a right to subscribe for, or to convert any security into, shares so allotted.
(3) If this section applies in relation to the grant of a right to subscribe for, or to convert any security into, shares, it does not apply in relation to the allotment of shares pursuant to that right.
(4) A director who knowingly contravenes, or permits or authorises a contravention of, this section commits an offence.
(5) A person guilty of an offence under this section is liable—
(a) on conviction on indictment, to a fine;
(b) on summary conviction, to a fine not exceeding the statutory maximum.
(6) Nothing in this section affects the validity of an allotment or other transaction.
Where a private company has only one class of shares, the directors may exercise any power of the company—
(a) to allot shares of that class, or
(b) to grant rights to subscribe for or to convert any security into such shares,
except to the extent that they are prohibited from doing so by the company’s articles.
(1) The directors of a company may exercise a power of the company—
(a) to allot shares in the company, or
(b) to grant rights to subscribe for or to convert any security into shares in the company,
if they are authorised to do so by the company’s articles or by resolution of the company.
(2) Authorisation may be given for a particular exercise of the power or for its exercise generally, and may be unconditional or subject to conditions.
(3) Authorisation must—
(a) state the maximum amount of shares that may be allotted under it, and
(b) specify the date on which it will expire, which must be not more than five years from—
(i) in the case of authorisation contained in the company’s articles at the time of its original incorporation, the date of that incorporation;
(ii) in any other case, the date on which the resolution is passed by virtue of which the authorisation is given.
(4) Authorisation may—
(a) be renewed or further renewed by resolution of the company for a further period not exceeding five years, and
(b) be revoked or varied at any time by resolution of the company.
(5) A resolution renewing authorisation must—
(a) state (or restate) the maximum amount of shares that may be allotted under the authorisation or, as the case may be, the amount remaining to be allotted under it, and
(b) specify the date on which the renewed authorisation will expire.
(6) In relation to rights to subscribe for or to convert any security into shares in the company, references in this section to the maximum amount of shares that may be allotted under the authorisation are to the maximum amount of shares that may be allotted pursuant to the rights.
(7) The directors may allot shares, or grant rights to subscribe for or to convert any security into shares, after authorisation has expired if—
(a) the shares are allotted, or the rights are granted, in pursuance of an offer or agreement made by the company before the authorisation expired, and
(b) the authorisation allowed the company to make an offer or agreement which would or might require shares to be allotted, or rights to be granted, after the authorisation had expired.
(8) A resolution of a company to give, vary, revoke or renew authorisation under this section may be an ordinary resolution, even though it amends the company’s articles.
(9) Chapter 3 of Part 3 (resolutions affecting a company’s constitution) applies to a resolution under this section.
(1) Except as permitted by section 553 (permitted commission), a company must not apply any of its shares or capital money, either directly or indirectly, in payment of any commission, discount or allowance to any person in consideration of his—
(a) subscribing or agreeing to subscribe (whether absolutely or conditionally) for shares in the company, or
(b) procuring or agreeing to procure subscriptions (whether absolute or conditional) for shares in the company.
(2) It is immaterial how the shares or money are so applied, whether by being added to the purchase money of property acquired by the company or to the contract price of work to be executed for the company, or being paid out of the nominal purchase money or contract price, or otherwise.
(3) Nothing in this section affects the payment of such brokerage as has previously been lawful.
(1) A company may, if the following conditions are satisfied, pay a commission to a person in consideration of his subscribing or agreeing to subscribe (whether absolutely or conditionally) for shares in the company, or procuring or agreeing to procure subscriptions (whether absolute or conditional) for shares in the company.
(2) The conditions are that—
(a) the payment of the commission is authorised by the company’s articles; and
(b) the commission paid or agreed to be paid does not exceed—
(i) 10% of the price at which the shares are issued, or
(ii) the amount or rate authorised by the articles,
whichever is the less.
(3) A vendor to, or promoter of, or other person who receives payment in money or shares from, a company may apply any part of the money or shares so received in payment of any commission the payment of which directly by the company would be permitted by this section.
(1) A company must register an allotment of shares as soon as practicable and in any event within two months after the date of the allotment.
(2) This does not apply if the company has issued a share warrant in respect of the shares (see section 779).
(3) If a company fails to comply with this section, an offence is committed by—
(a) the company, and
(b) every officer of the company who is in default.
(4) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.
(5) For the company’s duties as to the issue of share certificates etc, see Part 21 (certification and transfer of securities).
(1) This section applies to a company limited by shares and to a company limited by guarantee and having a share capital.
(2) The company must, within one month of making an allotment of shares, deliver to the registrar for registration a return of the allotment.
(3) The return must—
(a) contain the prescribed information, and
(b) be accompanied by a statement of capital.
(4) The statement of capital must state with respect to the company’s share capital at the date to which the return is made up—
(a) the total number of shares of the company,
(b) the aggregate nominal value of those shares,
(c) for each class of shares—
(i) prescribed particulars of the rights attached to the shares,
(ii) the total number of shares of that class, and
(iii) the aggregate nominal value of shares of that class, and
(d) the amount paid up and the amount (if any) unpaid on each share (whether on account of the nominal value of the share or by way of premium).
(1) This section applies to an unlimited company that allots shares of a class with rights that are not in all respects uniform with shares previously allotted.
(2) The company must, within one month of making such an allotment, deliver to the registrar for registration a return of the allotment.
(3) The return must contain the prescribed particulars of the rights attached to the shares.
(4) For the purposes of this section shares are not to be treated as different from shares previously allotted by reason only that the former do not carry the same rights to dividends as the latter during the twelve months immediately following the former’s allotment.
(1) If a company makes default in complying with—
section 555 (return of allotment of shares by limited company), or
section 556 (return of allotment of new class of shares by unlimited company),
an offence is committed by every officer of the company who is in default.
(2) A person guilty of an offence under this section is liable—
(a) on conviction on indictment, to a fine;
(b) on summary conviction, to a fine not exceeding the statutory maximum and, for continued contravention, a daily default fine not exceeding one-tenth of the statutory maximum.
(3) In the case of default in delivering to the registrar within one month after the allotment the return required by section 555 or 556—
(a) any person liable for the default may apply to the court for relief, and
(b) the court, if satisfied—
(i) that the omission to deliver the document was accidental or due to inadvertence, or
(ii) that it is just and equitable to grant relief,
may make an order extending the time for delivery of the document for such period as the court thinks proper.
For the purposes of the Companies Acts shares in a company are taken to be allotted when a person acquires the unconditional right to be included in the company’s register of members in respect of the shares.
The provisions of this Chapter have no application in relation to the taking of shares by the subscribers to the memorandum on the formation of the company.
(1) In this Chapter—
“equity securities” means—
ordinary shares in the company, or
rights to subscribe for, or to convert securities into, ordinary shares in the company;
“ordinary shares” means shares other than shares that as respects dividends and capital carry a right to participate only up to a specified amount in a distribution.
(2) References in this Chapter to the allotment of equity securities include—
(a) the grant of a right to subscribe for, or to convert any securities into, ordinary shares in the company, and
(b) the sale of ordinary shares in the company that immediately before the sale are held by the company as treasury shares.
(1) A company must not allot equity securities to a person on any terms unless—
(a) it has made an offer to each person who holds ordinary shares in the company to allot to him on the same or more favourable terms a proportion of those securities that is as nearly as practicable equal to the proportion in nominal value held by him of the ordinary share capital of the company, and
(b) the period during which any such offer may be accepted has expired or the company has received notice of the acceptance or refusal of every offer so made.
(2) Securities that a company has offered to allot to a holder of ordinary shares may be allotted to him, or anyone in whose favour he has renounced his right to their allotment, without contravening subsection (1)(b).
(3) If subsection (1) applies in relation to the grant of such a right, it does not apply in relation to the allotment of shares in pursuance of that right.
(4) Shares held by the company as treasury shares are disregarded for the purposes of this section, so that—
(a) the company is not treated as a person who holds ordinary shares, and
(b) the shares are not treated as forming part of the ordinary share capital of the company.
(5) This section is subject to—
(a) sections 564 to 566 (exceptions to pre-emption right),
(b) sections 567 and 568 (exclusion of rights of pre-emption),
(c) sections 569 to 573 (disapplication of pre-emption rights), and
(d) section 576 (saving for certain older pre-emption procedures).
(1) This section has effect as to the manner in which offers required by section 561 are to be made to holders of a company’s shares.
(2) The offer may be made in hard copy or electronic form.
(3) If the holder—
(a) has no registered address in an EEA State and has not given to the company an address in an EEA State for the service of notices on him, or
(b) is the holder of a share warrant,
the offer may be made by causing it, or a notice specifying where a copy of it can be obtained or inspected, to be published in the Gazette.
(4) The offer must state a period during which it may be accepted and the offer shall not be withdrawn before the end of that period.
(5) The period must be a period of at least 21 days beginning—
(a) in the case of an offer made in hard copy form, with the date on which the offer is sent or supplied;
(b) in the case of an offer made in electronic form, with the date on which the offer is sent;
(c) in the case of an offer made by publication in the Gazette, with the date of publication.
(6) The Secretary of State may by regulations made by statutory instrument—
(a) reduce the period specified in subsection (5) (but not to less than 14 days), or
(b) increase that period.
(7) A statutory instrument containing regulations made under subsection (6) is subject to affirmative resolution procedure.
(1) This section applies where there is a contravention of—
section 561 (existing shareholders' right of pre-emption), or
section 562 (communication of pre-emption offers to shareholders).
(2) The company and every officer of it who knowingly authorised or permitted the contravention are jointly and severally liable to compensate any person to whom an offer should have been made in accordance with those provisions for any loss, damage, costs or expenses which the person has sustained or incurred by reason of the contravention.
(3) No proceedings to recover any such loss, damage, costs or expenses shall be commenced after the expiration of two years—
(a) from the delivery to the registrar of companies of the return of allotment, or
(b) where equity securities other than shares are granted, from the date of the grant.
Section 561(1) (existing shareholders' right of pre-emption) does not apply in relation to the allotment of bonus shares.
Section 561(1) (existing shareholders' right of pre-emption) does not apply to a particular allotment of equity securities if these are, or are to be, wholly or partly paid up otherwise than in cash.
Section 561 (existing shareholders' right of pre-emption) does not apply to the allotment of securities that would, apart from any renunciation or assignment of the right to their allotment, be held under an employees' share scheme.
(1) All or any of the requirements of—
(a) section 561 (existing shareholders' right of pre-emption), or
(b) section 562 (communication of pre-emption offers to shareholders)
may be excluded by provision contained in the articles of a private company.
(2) They may be excluded—
(a) generally in relation to the allotment by the company of equity securities, or
(b) in relation to allotments of a particular description.
(3) Any requirement or authorisation contained in the articles of a private company that is inconsistent with either of those sections is treated for the purposes of this section as a provision excluding that section.
(4) A provision to which section 568 applies (exclusion of pre-emption right: corresponding right conferred by articles) is not to be treated as inconsistent with section 561.
(1) The provisions of this section apply where, in a case in which section 561 (existing shareholders' right of pre-emption) would otherwise apply—
(a) a company’s articles contain provision (“pre-emption provision”) prohibiting the company from allotting ordinary shares of a particular class unless it has complied with the condition that it makes such an offer as is described in section 561(1) to each person who holds ordinary shares of that class, and
(b) in accordance with that provision—
(i) the company makes an offer to allot shares to such a holder, and
(ii) he or anyone in whose favour he has renounced his right to their allotment accepts the offer.
(2) In that case, section 561 does not apply to the allotment of those shares and the company may allot them accordingly.
(3) The provisions of section 562 (communication of pre-emption offers to shareholders) apply in relation to offers made in pursuance of the pre-emption provision of the company’s articles.
This is subject to section 567 (exclusion of requirements by private companies).
(4) If there is a contravention of the pre-emption provision of the company’s articles, the company, and every officer of it who knowingly authorised or permitted the contravention, are jointly and severally liable to compensate any person to whom an offer should have been made under the provision for any loss, damage, costs or expenses which the person has sustained or incurred by reason of the contravention.
(5) No proceedings to recover any such loss, damage, costs or expenses may be commenced after the expiration of two years—
(a) from the delivery to the registrar of companies of the return of allotment, or
(b) where equity securities other than shares are granted, from the date of the grant.
(1) The directors of a private company that has only one class of shares may be given power by the articles, or by a special resolution of the company, to allot equity securities of that class as if section 561 (existing shareholders' right of pre-emption)—
(a) did not apply to the allotment, or
(b) applied to the allotment with such modifications as the directors may determine.
(2) Where the directors make an allotment under this section, the provisions of this Chapter have effect accordingly.
(1) Where the directors of a company are generally authorised for the purposes of section 551 (power of directors to allot shares etc: authorisation by company), they may be given power by the articles, or by a special resolution of the company, to allot equity securities pursuant to that authorisation as if section 561 (existing shareholders' right of pre-emption)—
(a) did not apply to the allotment, or
(b) applied to the allotment with such modifications as the directors may determine.
(2) Where the directors make an allotment under this section, the provisions of this Chapter have effect accordingly.
(3) The power conferred by this section ceases to have effect when the authorisation to which it relates—
(a) is revoked, or
(b) would (if not renewed) expire.
But if the authorisation is renewed the power may also be renewed, for a period not longer than that for which the authorisation is renewed, by a special resolution of the company.
(4) Notwithstanding that the power conferred by this section has expired, the directors may allot equity securities in pursuance of an offer or agreement previously made by the company if the power enabled the company to make an offer or agreement that would or might require equity securities to be allotted after it expired.
Companies Act 2006