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Core Module: BLP Paper A
Company Law - Private Limited Companies Issuing and Allotting Shares Issuing Shares
1. Director's Power / authority to allot shares [S.549 - 551]
Is the issue of shares a breach of any of the director's duties?
S.549: Director's require authority to allot shares S.550: exception to the rule -Private Companies with one class of shares only - directors do not need authority to allot shares except to the extent that they are prohibited from doing so in the articles. [
S.551: two or more classes -ordinary resolution is required and it must comply with the requirements set out. (S.551(3) = authorisation must specify
1.a) Maximum amount of shares that may be allotted; and
1.b) Date on which the authorisation will expire. [not more than 5 years from date of authorisation (or incorporation if no authorisation yet given)]
Consequence of Director's breach = commit offence under S.549(4) but allotment of shares remain valid (S.549(6))
2. What is the effect of the issue of shares -will it result in a variation of class rights?
S.630 procedure required?
3. Updating the constitutional documents.
Name and describe the different classes of shares [no need to name the owners]
4. Authorised Share capital
Def: maximum amount of shares which may be allotted by a company
CA 2006: does not contain concept of ASC.
Companies incorporated before October 2009: S.28 CA - provision of memorandum is treated as provision (restriction) within the articles.
What should company do if it wants to issue more shares:
1. Stay within ASC limit
2. S.42 ordinary resolution to increase or revoke the restriction. The Ordinary resolution has to be registered at CH S.29&S.30);
3. Amend the articles by special resolution (SR must be registered at CH S.29/30 and also new articles must be registered at CH S.26 (unless new articles are model articles without any variation).
5. S.580: No issue of shares at a discount
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