Anonymous
Share this content

Can a PLC issue PPS after formation?

Company limited by shares incorporatec 1985 Act

Didn't find your answer?

Hi,

I live in a share of the freehold and the Company that holds the title was incorporated under the 1985 Act. The memorandum and the articles say nothing about partly paid shares. However, the Company director has allotted a large number of shares and offered them as partly paid. Luckly, I didn't buy them, as if there was a call to pay the balance, I would find myself having to pay a very large sum of money. 

My question is: Can partly paid shares be allotted with an ordinary resolution? My understanding is that Company Act 2006 does make such provision.

What is required to make such a move, if the Articles and the Memorandum don't specify anythimg about partly paid shares plan?

Thanks

A.

 

 

Replies (11)

Please login or register to join the discussion.

avatar
By paul.benny
29th May 2021 08:31

Are you sure it's a PLC?
Why is the company issuing more shares?

The scenario as described doesn't quite make sense to me: you own a share of freehold where the title is owned by a company? That sounds like you actually own a share of a company. So if the company issues more shares, your ownership is diluted. I would expect there to be provisions to prevent this.

You may need legal advice based on the full facts.

Thanks (1)
avatar
By Antonellav
29th May 2021 09:14

Thanks for your answer.
The Company is a private company limited by shares and yes I own shares and my shares were diluited as a result of the allotment. However, as I said the Memo and the Articles have no sections related to shares, and nothing around a partly paid plan.
I know I need legal advise, I was just thinking that in this forum someone had come across a similar situation related to partly paid shares issued after the company formation. If there is no restriction in the Articles, then I guess the company director either change the AoA by special resolution, pass an ordinary resolution or refer to the letter of Company Act 1985 or 2006.
A.

Thanks (0)
Replying to Antonellav:
avatar
By paul.benny
29th May 2021 10:56

So, notwithstanding the heading to the OP, it's not a PLC (=public limited company).

The Companies Act 2006 superseded the 1985 Act. It's possible there are some provisions in the Articles that still reference the earlier act.

From your partial facts, the ability of an existing company to issue partly paid shares is not the point. But it's difficult to comment further without more information.

Thanks (0)
By SteveHa
30th May 2021 19:05

Notwithstanding what the Co Director thinks he has or hasn't done, have a majority of shareholders approved this at a general meeting?

Thanks (1)
Replying to SteveHa:
avatar
By Antonellav
31st May 2021 08:39

Hello,
There are three flats in the building, and the other two owners (a couple) do not have the 75% to pass a special resolution.
However, they changed the AoA, passed a special resolution and uploaded them on Company House. Then they allotted the shares and offered them first at face value (£1.00) and in a second call as partly paid (£0.1). The aim of the special resolution was to give the director authority to forfeit my shares had I not paid the call.
I took legal advise and finally the director took down the AoA that were passed through an invalid resolution. But the share that were allotted and paid at the value of 0.1 each (rather than 1.00) are all in their possession.
That's why I am asking whether to issue partly paid shares it is necessary that this arrangement is detailed in the Articles, and if the Articles say nothing (like in ours), then is Company Act that would rule. And as I understand, although the directors can allot share with an ordinary resolution, then those share must be paid in full. To offer them as partly paid , you need to change the Articles and pass a special resolution.
Am I wrong?
A.

Thanks (0)
Replying to Antonellav:
avatar
By paul.benny
31st May 2021 08:45

So what did your legal adviser say about the additional shares?

Thanks (0)
Replying to paul.benny:
avatar
By Antonellav
31st May 2021 09:23

I don't yet have an answer to that. All the legal adviser did was to write to the director and ask to take down the resolution. If I had an answer about the PPS, I would not be asking here.
A.

Thanks (0)
Replying to Antonellav:
avatar
By paul.benny
31st May 2021 10:00

Sounds like your legal adviser only half the job. Perhaps that because that's all they were asked to do? A decent lawyer would have advised on your wider position.

I'm out.

Thanks (1)
Replying to Antonellav:
RLI
By lionofludesch
31st May 2021 08:46

Quote:

Hello,
There are three flats in the building, and the other two owners (a couple) do not have the 75% to pass a special resolution.
However, they changed the AoA, passed a special resolution and uploaded them on Company House. Then they allotted the shares and offered them first at face value (£1.00) and in a second call as partly paid (£0.1). The aim of the special resolution was to give the director authority to forfeit my shares had I not paid the call.
I took legal advise and finally the director took down the AoA that were passed through an invalid resolution. But the share that were allotted and paid at the value of 0.1 each (rather than 1.00) are all in their possession.
That's why I am asking whether to issue partly paid shares it is necessary that this arrangement is detailed in the Articles, and if the Articles say nothing (like in ours), then is Company Act that would rule. And as I understand, although the directors can allot share with an ordinary resolution, then those share must be paid in full. To offer them as partly paid , you need to change the Articles and pass a special resolution.
Am I wrong?
A.

You need a lawyer.

Thanks (1)
RLI
By lionofludesch
31st May 2021 06:41

Ah - the dangers of using acronyms.

Thanks (0)
avatar
By Paul Crowley
31st May 2021 12:57

The other 2 clearly have a plan, which may end up as an oppression on the minority.

https://www.google.com/search?q=minority+shareholder+oppression+uk&rlz=1...

Get a solicitor experienced in these matters

There can be no good reason for their actions, so clearly a time to take up arms.
Make sure you have money ready

Thanks (1)
Share this content