New Share Capital Provisions

With the Companies Act 2006 now fully in force, a promised simpler statutory regime for limited Companies is extending into many areas of Company life. Nowhere is this more apparent than the rules relating to a Company’s share capital, which have been relaxed in several key areas.

Aside from the abolition of the concept of an “Authorised Share Capital” for new Companies and those existing Companies with the appropriate changes to their Articles of Association (link to amended articles), easier rules for the allotment of shares promise to make new issues an easier process. For a new private limited Company with only one share class, directors no longer need to seek prior shareholder approval before allotting shares, although should shareholders still require to be asked, the articles can be modified accordingly.

Continuing the theme of “simplification”, a Company no longer needs specific authorisation for certain alterations of capital including reduction, redemption, buybacks, sub-division, and consolidation of share capital. In a complete reversal of the previous position, shareholders may resolve to approve any of these, unless the Company is specifically prohibited from doing so.

Running against the tide of simplification is the increased need to file a statement of share capital, which must be provided in most cases where there is a change to its share structure. The requirements are included on a range of new forms, and strict time limits for filing apply. Similarly, permitted uses for a Company’s share premium account have been significantly tightened.

The new regime promises to simplify much of the procedure associated with changing a Company’s share capital. Please contact the commercial team at Tolhurst Fisher if you would like to take advantage of this by clicking the link below.