11 - Shares

• Shares in a limited company must have a fixed nominal amount (s. 542). If they do not, then the allotment is void.
• Within one month of making an allotment of shares, the company must deliver to Companies House a return on the allotment (Form SH01).
• If a private company has only one class of shares, then the directors are authorised to allow more shares of that same class, subject to Articles.
• Public companies are subject to a minimum allotted share capital requirement.
• The three types of share allotment that are not subject to pre-emption rights are:

  1.        Bonus shares

  2.        Shares that are to be wholly or partially paid up otherwise than in cash

  3.        Shares allotted as part of an employee share scheme
• How can pre-emption be excluded in a private company?

  Articles
• Can shares be allotted at a discount?

  No
• A company must, within two months of the allotment, have ready share certificates for delivery to the relevant holders in relation to the allotment. Failure to do so is a criminal offense.
• The three legal frameworks under which public offers of shares are regulated are:

  1.        EU Law

  2.        Financial Services and Markets Act 2000

  3.        The FCA and the FCA Handbook
• Are all public companies eligible for listing?

  No
• An offer for subscription involves the company offering to the public a certain amount of shares.
• An offer for sale involves an investment bank subscribing for all the shares being offered by the company, and the bank then offering those shares to the public.
• A placing usually involved an investment bank 'placing' its shares with selected purchasers rather than the public at large.
• A rights issue is an offer made to existing shareholders of the company - in proportion to their existing shareholding.
• Certain markets, such as LSE's Main Market, will only accept listed securities.
• All listed companies must comply with the two Listing Principles:

  1.     A Listed company must take reasonable steps to establish and maintain adequate procedures, systems and controls to enable it to comply with its obligations (Listing Principle 1).

  2.     A Listed company must deal with the FCA in an open and co-operative manner.
• The relevant rules regarding prospectuses are found in FSMA 2000 and the FCA Handbook.
• A prospectus requires approval by the FCA.
• The task of determining what amounts to a variation of class rights has been left to the courts.
• Shares can be passed from one person to another by transfer or transmission.