Q. What Companies Act capital changes were implemented on 6th April 2008 that relate to capital changes?
A. Public companies will need to establish whether they are maintaining the minimum share capital in sterling or euros (previously only sterling was permitted).
Q. What section of the 2006 Act related to the public company minimum share capital changes?
A. Sections 761 - 767 relate to the public company minimum shares capital in euros.
Q. What are the minimum authorised share capital requirements in sterling and euros?
A. The minimum authorised share capital is either 50,000 in sterling or 57,100 in euros.
Q. What will the authorised capital requirements be for PLC's?
A. From 6th April 2008:
Q. What capital changes were introduced from 1st October 2008?
A. Private Limited Companies will be able to cancel issued share capital by means of a special resolution supported by a solvency statement, as an alternative to obtaining a court order.
The prohibition on financial assistance by private companies for acquisition of its own shares will be lifted for assistance given on or after 1st October 2008. The forms 155(6)a and 155(6)b need no longer be sent to Companies House in these circumstances.
Further details on both of these changes can be found on the October 2008 implementations page.
Q. What is the Statement of Capital?
A. The statement of capital is a “snapshot” of a limited company’s issued share capital at a given time.
Companies incorporating as limited by shares (whether private or public) on or after 1st October 2009 must complete a statement of capital and initial shareholdings as part of the application to incorporate.
All companies limited by shares must complete a statement of capital as part of any annual return filing made up on or after 1st October 2009.
A statement of capital must also be completed with certain forms associated with notification of capital changes, namely:
In all the circumstances listed above, the statement of capital will be an integral part of the appropriate form.
There will be certain circumstances where a company needs to file a ‘standalone’ statement of capital – accompanying a reduction of capital (either via the ‘solvency statement’ route or as confirmed by a court) and (in some circumstances) when re-registering from an unlimited to a limited company. A statement of capital form will be available for these purposes.
Q. What is the content of the statement of capital?
A. The statement of capital must show with regards to the issued capital:
the total number of shares of the company,
(i) prescribed particulars of the rights attached to the shares (these will be determined in regulations and indicated on the appropriate forms),
Q. Do I have to complete a statement of capital each time I submit one of the relevant forms?
Q. What if the form details several transactions (e.g. an allotment of shares over a period of time)?
A. The statement of capital should reflect the issued capital following the ‘latest’ transaction.
Q. How can I fill in the statement of capital (eg in my annual return) if I cannot identify the premium on individual shares?
A. The statement of capital requirement in the Companies Act 2006 is intended to provide a snapshot of a company’s capital structure. A statement of capital is required each year in the annual return, and whenever a company changes its capital.
We are aware that one of the details required to be included in the statement of capital can cause problems for certain companies that have a complex history of allotting shares and managing their capital structure. In particular, we understand that in certain circumstances it may not be possible or meaningful for a company to identify the amount of premium paid up on each share.
The Department for Business Innovation & Skills is working with the Institute of Chartered Secretaries and Administrators (ICSA), who first drew this to our attention, and with other stakeholders to seek a resolution of this problem.
In the meantime, we hope that companies with complex capital histories will do what they can to provide numbers in their statements of capital that provide a pragmatic allocation of their share premium reserve between shares or classes of shares. ICSA has published guidance on this (read the guidance), explaining the problem and outlining a recommended approach.
When completing a statement of capital, in the annual return form or elsewhere, it is important that a company does not leave blank the field for the amount paid up on each share, or the form will be rejected by Companies House’s system. Further FAQs on BIS website.
Q. What information relating to share rights needs to be completed on a statement of capital?
A. When completing a statement of capital for an Annual Return you need to provide details of the voting rights attached to each class of shares.
When completing a statement of capital for other share capital documents and on formation of a company you need to provide details of the full prescribed particulars attached to each class of shares.
Q. What are the prescribed particulars?
A. The prescribed particulars are defined in secondary legislation, namely the Companies (Shares and Share Capital) Order 2009. The particulars are:
(a) particulars of any voting rights attached to the shares, including rights that arise only in certain circumstances;
Q. Where can I find information on the voting rights and prescribed particulars which apply to my company?
A. In most instances, rights attached to shares are subject to an agreement between the company and its members and are defined in a company’s Articles of Association. In other instances, such information may be contained in a company resolution. These should always be the first points of reference when you are trying to find information on the voting rights and prescribed particulars applicable to your company.
If you are still unable to find information on the voting rights and prescribed particulars after checking the Articles of Association and any resolutions, you may want to seek professional advice.
Q. Can Companies House give some examples of the wording that will be acceptable when completing the voting rights and prescribed particulars on a statement of capital?
A. Yes, but this is limited to the simplest case of a private company limited by shares using the model articles provided in the Companies (Model Articles) Regulations 2008. Examples of the wording that could be used for voting rights, dividend rights or distributions on winding up are as follows:
“each share is entitled to one vote in any circumstances” – this wording will reflect the general legal position of one member one vote under section 284 Companies Act 2006;
“each share is entitled pari passu to dividend payments or any other distribution” – this will reflect a basic right to dividends but any dividend must be made in accordance with the Companies Act and the company’s articles of association; and
“each share is entitled pari passu to participate in a distribution arising from a winding up of the company” - any distribution from a company being wound up will therefore operate in accordance with the law.
It is very unlikely that companies using the model articles will issue shares with capital distribution rights. Generic wording is therefore difficult to provide and companies with such shares are better placed to describe the rights attached.
It is not possible to provide standard wording in relation to redeemable shares. The issue of such shares is at the discretion of a company. If redeemable shares are issued the directors may determine the terms, conditions and manner of redemption. The specific wording setting out the rights will be required.
If there are any amendments made to the model articles to adapt them or resolutions passed detailing share rights of a company, the examples above may not adequately reflect the share rights that must be disclosed. If the rights information is not easily obtainable from the company’s articles of association or resolutions, you may want to seek professional advice.
Please note: Companies House will reject statements of capital in instances where full information is not provided or where reference is made to another document for the share rights information. Some examples of wording which will result in the statement of capital being rejected are:
'please see the Articles of Association for the rights';