Cancel unpaid share premium?

Cancel unpaid share premium?

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A private limited company issued additional shares, some to the sole existing shareholder and some to a new shareholder. The intention was that the new shareholder buy the shares at a premium and the existing shareholder by them at par. However in fact what they did was issue all shares at a premium and the original shareholder never paid the premium. The company has not called the premium and never intends to (it is still controlled by the original shareholder). How can the unpaid premium be cancelled so that it can never be called, and what tax consequences are there of this error - s455 I believe doesn't apply until the company called the premium? Many thanks.

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By johngroganjga
24th Mar 2015 08:10

What does the return of allotments at Companies House say about the price at which the shares were issued?

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By whatdoyoumeanwashe
24th Mar 2015 08:28

It shows two lines of ordinary £1 shares allotted: first line say 50 shares, £0 paid, £1,000 unpaid per share, second line say 25 shares, £1,000 paid per share, £0 unpaid. The first line should have said 50 shares £0 paid, £1 unpaid per share (I think they should have paid the £50 and should do so once this problem is resolved).

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By johngroganjga
24th Mar 2015 08:36

So the return says 75 shares were allotted at £1,000 each?

So where does that leave the issue at par to the existing shareholder? is that on a separate form?

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By whatdoyoumeanwashe
24th Mar 2015 08:58

The issue at par to the existing shareholder was the first line on the SH01 described above, but it was completed incorrectly. It said 50 shares, £0 paid, £1,000 unpaid, but should have said 50 shares, £0 paid, £1 unpaid.

The individuals concerned did this themselves without engaging an accountant and without appreciating the significance.

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By johngroganjga
24th Mar 2015 09:02

Yes I see now.

I'd just amend and re-file the return of allotments.

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By whatdoyoumeanwashe
24th Mar 2015 09:13

Thanks John. That was my inclination. And the annual return(s) too? 

I was just a bit worried it was something that was irreversible. E.g. you can buy back shares but you can't "unissue" them (to my knowledge). But by re-filing the returns you could effectively unissue shares, if no party objected?

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By johngroganjga
24th Mar 2015 09:18

You are not "unissuing"

You are not "unissuing" shares. You are correcting an incorrect form. From what you say there was never any intention at the time the form was completed that the original shareholder would pay more than £1 for each of his 50 new shares.

I wouldn't worry about past annual returns. 

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By whatdoyoumeanwashe
24th Mar 2015 09:33

Thanks John. Yes, I know in this case we're not "unissuing" shares, it just occurred to me that someone could use a re-filed SH01 to effectively reverse a share issue (the key being the intent of course, which could be hard to prove).

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