Chapter 2: Share capital

This chapter provides guidance on alterations to capital, such as the consolidation or subdivision of shares, the reconversion of shares into stock, the redenomination of issued shares, the reduction of capital and the effect of alterations of capital on voting rights. It also looks at different classes of shares, share premiums and membership. The chapter also examines share schemes, such as employee share schemes, and the prohibition of financial assistance by the company for the acquisition of its own shares. It also considers the authority for allotment of shares, and pre-emption rights. The chapter provides guidance on the requirements of payment for shares, the valuation of non cash considerations, the acquisition of non cash assets from subscribers or shareholders, and the penalties and relief applicable. It examines a serious loss of capital, and calls, instalments and forfeiture, as well as warrants and subscription rights and their exercise. It looks at rights and capitalisation issues.

Precedents include:

  • Precedent 2.A Resolution (company in general meeting) and subsequent board resolution to consolidate shares and sell fractions

  • Precedent 2.B Resolution (company in general meeting) and subsequent board resolution to subdivide shares

  • Precedent 2.C Resolution (company in general meeting) and subsequent board resolution to reconvert stock into shares

  • Precedent 2.D Resolution (company in general meeting) to redenominate issued shares

  • Precedent 2.E Special resolution (company in general meeting) to reduce capital

  • Precedent 2.F Resolution (directors) to dispense with distinguishing numbers of shares

  • Precedent 2.G Redesignation of existing issued shares

  • Precedent 2.H Form of application for shares (suitable for a private company)

  • Precedent 2.I Resolution (directors) for allotment of shares, etc.

  • Precedent 2.J Resolution (directors) to approve contract for allotment of shares for non-cash consideration

  • Precedent 2.K Declaration of trust (short form)

  • Precedent 2.L Declaration of trust (extended form)

  • Precedent 2.M Information rights nomination form

  • Precedent 2.N Resolution (company in general meeting) giving directors authority to allot shares

  • Precedent 2.O Special resolution for the disapplication of pre-emption rights

  • Precedent 2.P Statement of directors under Companies Act 2006, section 571(6)

  • Precedent 2.Q Call letter

  • Precedent 2.R Resolution (directors) for the making of a call

  • Precedent 2.S Resolution (directors) for forfeiture of shares

  • Precedent 2.T Warrant

  • Precedent 2.U Specimen conditions attaching to subscription rights

  • Precedent 2.V Rights issue (private company)

  • Precedent 2.W Renounceable letter of allotment (private company)

  • Precedent 2.X Bonus issue (private company)


    Alterations To Capital
    Shares And Membership
    Application And Allotment
    Share Schemes And Financial Assistance
    Statutory Restrictions On Allotment
    Payment For Shares
    Serious Loss Of Capital
    Calls, Instalments And Forfeiture
    Warrants And Subscription Rights
    Rights And Capitalisation Issues