Company Law Solutions provides expert help and guidance to companies seeking to undertake a subdivision of shares. Our team can guide you through the subdivision process, providing you with the legal support and expertise you need to make the right decisions for your company.
If you're unsure of how to go about the subdivision process, our team can guide you through it, ensuring that your documentation complies with the statutory requirements. Contact us today to learn more about how we can help you.
What Is A Subdivision of Shares?
A subdivision of shares refers to the process of dividing existing shares into smaller units. Every company's shares must have a 'nominal' value, which in most companies is £1. The nominal value of a share very often bears no relation to its actual (market) value. For example, some companies might only have one £1 share in issue, but may also have assets worth many thousands of pounds; this means that all of that value is concentrated in the single share. Subdividing that share into multiple shares of a smaller nominal value (e.g. ten £0.10 shares, or 100 £0.01 shares) does not change the overall value or ownership percentage of the shareholder's investment in the company; instead, it effectively splits it into more units of ownership.
Why Would A Company Undertake A Subdivision of Shares?
A subdivision of shares is useful in a variety of scenarios. As mentioned above, it can be used to solve the problems created by a large market value being concentrated in very few shares. In such a situation, a subdivision makes the share capital of the company easier to manipulate, and allows a shareholder to (for example) transfer a smaller proportion of their holding to a third party than would otherwise be possible. Subdivisions are also often used as a constituent element of a larger or more complex matter, such as when it is necessary to convert a specific percentage of an existing shareholding into different classes but there are insufficient shares in issue to achieve the proportions desired.
Legal Requirements Regarding Subdivisions of Shares
Companies must follow the correct legal procedures, and prepare the correct paperwork to ensure that a subdivision of shares is carried out properly. After a subdivision takes place, the must ensure that all relevant documentation is updated (including share certificates, the company's register of members, and the filing history at Companies House).
The Company Law Solutions service provides everything required to be legally compliant, including:
- guidance as to the applicable procedures
- minutes of directors' meetings
- notices of shareholders' resolutions
- shareholders' consents to resolutions
- notices for Companies House
- completed official forms for Companies House
- our straightforward, step by step guide to completing the procedures
If required, we can supply new share certificates at a small extra cost.
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