Re-classification of exisiting shares

It is possible to reclassify a portion on a class of shares already issued eg 100 issued ord  reclassify as say 80 ords, 10A and 10B shares (company formed under CA06 so no authorised capital broadly following model articles)

I can't find anything that says you can't or anything that you can do it.  None of the companies house forms (SH) seem to cover this so if possible it would seem that only a resolution would need filing.

Thanks

Comments

Redesignation of Shares

alastairfriend@... | | Permalink

If you are just renaming the shares you will have to submit Companies Form SH08. In the event you are changing the rights you will need Companies Forms  SH08 and SH10.   Model 2006 Articles has the power in clause 21 to create new share classes, which is by Ordinary resolution, which will be based on the example below: 

That the 100 Ordinary shares of £1 each in the Company held by x , y & z, which have been issued and fully paid up be converted into and redesignated as x  Ordinary Shares of £1.00 each, x Ordinary A Shares of £1.00 each & x B Ordinary Shares of £1.00 each, having the rights and being subject to the conditions set out below.

You do not need to submit a copy of the Resolution to Companies House, nor do you need to change the Articles. However for good record I would ensure a copy of the resolution is kept at the front of them for easy future reference.

I hope this helps

Alastair 

 

 

 

 

 

 

Further clarification please

pkhaynes | | Permalink

Thanks Alisatair for your reply.

I think you mean clause 22 not 21 of the Model articles.  This does, however refer to the issue of shares (which is my mind suggest more shares are to be allotted) and not reclassification of an exisiting class of  shares that have already been issued.

Also I have found that  s617 CA06 refers to a company not altering its share capital except by issuing, reducing, subdivision or demonination of its shares - it says nothing about reclassification?

I have some notes under the CA85 regime which suggests reclassification of a class of shares was not uncommon with some practitioners doing this by way of a conversion of one class to another by ordinary resolution (special if variation of class right of other classes of shares).

It my circumstances however the proposal if for only some of the existing class to be reclassified not all the shares of the class.

On the form SH08 would list the existing class as ordinary and on the right column then just list the 3 classes of shares ords, A and B.

The proposal is that the A and B and ord shares can have dividends declared at the exclusion of each other - not all exisiting shareholders would get the A and B shares - so potentially diminishing the ord shareholders entitlements - this would I have thought needed a special resolution rather than an ordinary resolution?

Any more thoughts?

Thanks

A further thought?

alastairfriend@... | | Permalink

I agree that there is no specific reference to re classifying shares but it is implied providing there is the consent of shareholders and share classes. Although an Ordinary Resolution could be used,  it  is best effected by Special Resolution.

The share classes A & B need to be established with their individual rights in the capital of the company. I would do this by special resolution for the sake of belt and braces.

A separate class meeting will then be needed for the Ordinary shares to change their rights to receive all the dividends. Again by special resolution.

As there is a complication of only some of the ordinary shareholders  receiving reclassified shares you should name the individuals and the numbers that are having their Ordinary shares redesignated into A & B shares in the special resolution.  The wording in the previous reply could be used.  I think a certified copy of the resolution needs to be filed along with the forms.

The area that I am not sure about is if section 629 and uniform rights apply, as I have not seen this being used before?

I hope this helps 

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A space for practitioners to contribute and ask questions relating to company secretaries, particularly with reference to the new Companies Act 2006.