Shares

Understanding shares (including what shares are, how a company issues shares, what rights are attached  to shares, how shares are transferred, how shares confer voting rights and how they are the key to receiving dividends) is essential for anyone involved in a company. These are complex matters and this page explains the Company Law Solutions services in relation to shares and provides a great deal of information on this whole area.

Many private companies have just one class of shares (ordinary shares). Occasionally new shares need to be allotted (or issued) or transferred from an existing shareholder to somebody else. The company's articles will contain rules on allotment and transfer and these and the Companies Acts regulations must be followed. Sometimes 'free' shares are given to existing shareholders as bonus shares. When a shareholder leaves the company one option may be for the company to buy back the shares, and there is a new statutory procedure under the Companies Act 2006 for a company to reduce its share capital

Increasingly, even small companies are creating different classes of shares to issue to family members, employees and others, or converting existing shares into different classes, usually for tax purposes. UK company law supports a very sophisticated system for shares in companies and Company Law Solutions can create new classes of shares and convert existing shares into different classes. Most shares are £1 shares but it is possible to have shares of any denomination and for shares to be sub-divided into shares of smaller nominal value (e.g. from £1 shares to 10p shares).

Company Law Solutions services

Share allotment
Issuing new shares either to existing shareholders or to bring someone new into the company

Share transfers
When shares are sold or given away

Creating new classes of shares
Changing the articles to set up different classes of shares, e.g. voting shares and non-voting shares. Once this is done, the shares may have to allotted and/or existing shares converted (converted) to the new class or classes.

Redesignating existing shares
Converting a share from one class to another. This is often done after a new class of shares is created.

Subdivision and consolidation
Dividing shares into smaller units (e.g. dividing each £1 share into 10 shares of 10p) or the opposite process.

Issuing bonus shares
Bonus shares are shares issued to existing shareholders instead of paying them a dividend (technically called a 'capitalisation of reserves').

Company buy-back
Where a company buys back its shares from a shareholder.

Reduction of capital
Where shares are cancelled or reduced in nominal value. There is a new procedure under the Companies Act 2006 to enable a reduction to be made without a court order.

Information about shares

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