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Time’s up for bearer shares

20th Jun 2014
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“Transparency” and “Trust” are key drivers for the Department for Business Innovation and Skills (“BIS”). Its July 2013 consultation paper advocated the enhancement of transparency of UK company ownership, and the increase in trust in UK business.
One of the key concepts outlined in the April 2014 proposals is the abolition of existing bearer shares and a ban on the creation of any new bearer shares.
With the proposals likely to receive Royal Assent in October 2015, what does this mean for companies with existing bearer shares in issue?
The government has proposed a time period for companies to take action:
• Two months following Royal Assent, before the policy comes into force, companies should make arrangements with their bearer shareholders to encourage them to surrender their warrants where it is permitted in the company’s articles of association.
• There will be a period of nine months during which the bearer shareholders will have to surrender their existing warrants and convert them to registered shares (i.e. held by a named shareholder).
 In month one, there is a formal requirement for companies to contact the bearer shareholders informing them of the changes
 By month two, bearer shareholders will have no voting rights, no rights to dividends or rights to transfer their warrants
 During month eight, companies should remind bearer shareholders of the changes if they have still not surrendered their warrants
 At the end of the nine month period, companies that still have bearer shares will have a further three months to make a court application to cancel them. At this stage the option for bearer shareholders to surrender their warrants will no longer be available
When the policy is in force companies will be prohibited from issuing bearer shares so companies considering a new bearer share issue in the interim would be well advised to think again.
For more information, visit:
https://www.gov.uk/government/uploads/system/uploads/attachment_data/fil...
https://www.gov.uk/government/organisations/department-for-business-inno...
http://www.companieshouse.gov.uk/

About the author: Karina James-Wiltshire LLB, GCILEx, is Corporate Legal Advisor, Jordans Corporate Law Limited. Contact her on 0117 918 1251 or [email protected]

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