Company Law Solutions offers guidance to companies seeking to convert shares. Our team can assist you with converting shares to adjust their voting, dividend and capital rights, as well as being able to cater for more bespoke or complex scenarios.
If you're looking to convert shares, we can help you navigate the process and identify the best options for your company. With our expertise, you can rest assured that the conversion process will be taken care of just as you need it. We provide all the necessary documentation to ensure full compliance. Contact us today to see how we can help you with your share conversion needs.
What Is A Conversion of Shares?
A conversion of shares refers to the process of converting shares from one class to another. Some companies will only ever have a single class of shares - ordinary shares - but many others will wish to have classes which have different rights from one another so as to be able to vary (for example) the voting power, or the rights to dividends and/or capital, attaching to the shares they have in issue. As well as being able to issue new shares in such classes, it's possible also to convert shares to different classes to achieve similar purposes, without requiring extra investment in the company. Shares can be converted between classes which already exist in the company's articles, but it more common for companies to want to combine the creation of new share classes with the conversion of existing shares to them. We offer both services, but it is the latter combined process to which the service described below relates.
Why Would A Company Convert Its Shares?
There are numerous reasons why a company might wish to convert its shares from one class to another. A very common one is so as to enable the directors to declare different dividends on individual shareholdings without changing the number of shares in issue to each shareholder (which would have the almost certainly undesirable side-effect of altering their voting power/ownership stake in the company). Many companies are set up with the Model Articles and/or more than one person holding shares in a single ordinary class, each of which makes varying the amount of dividend payable per share between the shareholders impossible. Amending the articles of association so as to empower the company to have different classes of shares, and then converting the shares to them, solves this problem.
Similarly, a company may, for example, wish to convert redeemable shares to non-redeemable ones; this is often useful where (say) an employee has previously been given a redeemable shareholding, but the company now wishes to reward their loyalty by giving their shares a greater degree of permanency. The same logic applies to non-voting shares being converted to voting ones, and so on.
Challenges and Solutions in Converting Shares
The conversion of shares is far from a simple task and many companies which attempt to do so get it badly wrong. This can have potentially catastrophic consequences, both short-term (e.g. with regard to the shareholder's tax position) and further down the line (e.g. where the due diligence performed on behalf of a company's prospective buyer reveals uncetainty as to the nature of the shares in issue, and as to who owns what). It is vital to ensure that the company's articles and filing history are checked and any potential issues resolved, with the benefit of a sound knowledge of the law relating to this area. It is similarly crucial to ensure that the correct paperwork - which can often run to numerous pieces of documentation - is produced and properly drafted.
We make it easy to introduce new classes of shares into your company by handling the process from start to finish – allowing you to get on with running your business.
The Company Law Solutions service provides everything required to be legally compliant, including:
- new articles of association
- minutes of directors' meetings
- notice of resolutions
- shareholders' consents to resolutions
- completed official forms for registration at Companies House
- our straightforward, step by step guide to completing the procedures
If the company is a ‘single person’ company, with just one director/shareholder, appropriate alternative documentation is provided.
Our charge for most share conversions is £325 + VAT. However, because every company is different, we need to study the company’s filing history to ensure that there are no complicating factors. Please complete our quick quote form below and we will be in touch as soon as possible with a firm, no-obligation quote.
|Conversion of shares||From £325.00 + VAT||Quote|
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