A more recent version of these Issuing And Allotting Shares notes – written by Cambridge And Oxilp And College Of Law students – is available here.
The following is a more accessble plain text extract of the PDF sample above, taken from our Business Law and Practice Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:
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
Buy the full version of these notes or essay plans and more in our Business Law and Practice Notes.