Share swap?

Share swap?

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Client company has say 100 shares in issue, of which 92 are A Ordinary shares; remaining 8 are B, C and D Ordinary shares.  All have the same rights and values.  Client now wishes to make a change which would leave only 90 A shares in issue along with the 8 B,C and D, and 2 E Ordinary shares.  The authorised capital (pre Co. Act changes) includes A,B,C,D,E and F classes.

Would it be acceptable to issue 2 E shares as fully paid up, the consideration being the 2 A shares?

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By Goulbourn
22nd Jul 2010 17:17

Share Swap

The simple answer is no. Without knowing what you are attempting to achieve by the restructure, it is impossible to advise.

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By Markaccplus
22nd Jul 2010 20:53

Nothing nefarious going on..

The majority shareholders hold the 90 A shares themselves and currently hold the remaining 10 as nominees for  minority shareholders, but do not want any of the minority shareholders to hold A shares, hence the desire to change 2 A shares to E shares,  The current allocation arose through circumstances when a previous shareholder left.

Thanks George.......That sounds a bit too easy. 

Would I be right in thinking that you are referring to the process of assigning a new name or designation to a class of shares?.  If so does that not apply to a whole class of shares rather than just 2 particular shares in a class.   It would make things very easy if it were that simple.

 

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By Goulbourn
24th Jul 2010 17:33

share swap

You cannot re-designate part of a class of shares.  Class rights are governed by the articles of association and are applicable to the whole of that class.  Class rights have to be altered by the articles of association and apply to the whole of that class.

As all shares have the same rights and values, I am not uncertain as to the overall objective.  I also wonder what happened to the original ordinary share (s). Presumably they became the A Ordinary.

Depending upon the tax implications, it might be possible for the company to purchase two A Ordinary and issue two new E Ordinary shares. The other possibility instead of the company purchasing the shares, the A Ordinary Shares could be transferred (with holdover relief if necessary) to the required beneficiaries.

 

 

 

 

 

 

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