Authorised share capital
April 2007
The Act abolishes the requirement for a company to have an authorised share capital. If shareholders wish to restrict the number of shares that the company can issue they will need to include a restriction by passing a special resolution to amend the company’s articles of association.
One implication of this is that, for most new companies incorporated after the Act comes into force, the cost and delay associated with issuing new shares will be reduced.
Section 9 of the Act provides that on formation of a company, a statement of capital and initial shareholdings must be submitted to the registrar with the application for registration. Information to be included in this statement is set out in section 10, and includes:
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The total number of shares to be taken on formation by the subscribers to the memorandum; |
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The aggregate nominal value of those shares; |
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The rights attached to them; and |
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The amount paid up on each share. |
Following consultation, the DTI has concluded that the current authorised share capital regime should continue to operate for existing companies, but with a transitional provision to be introduced by the government allowing such companies to remove this restriction from their articles by way of ordinary resolution instead of special resolution.
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