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How does an invalid ROC filing get corrected

How does one correct an allotment of shares that exceeded the number permitted and stated in M&A

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A client filed an allotment of a second "B" share at the ROC although specific clauses in both the M&A clearly state that only one can be in issue. At the time of the allotment this was the situation, so the later allotment was, in my view, not possible from a legal viewpoint. Numerous attempts to deal with the matter at the ROC are proving to be unsuccesful and conflicting comments and advice are being received from them. How can you amend the ROC record? A form RP04 cannot be used (although this had been advised) because the number of shares in that 2nd allotment (SH01) cannot be reduced from 1 to Zero. The whole situation is now causing further problems because HMRC would normally be involved (ERS activities~Share scheme annual return) but, again in my view, there can be nothing to report to HMRC because the recorded transaction cannot be regarded as having legally taken place and is therefore invalid. Are there any suggestions as to what procedure is required to, in effect, completely remove any reference to that 2nd allotment in the ROC record and is the view shared that an HMRC annual return filing requirement would be superfluous? 

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By Matrix
16th Jun 2021 17:45

I have no idea and think it is a legal question but I don’t follow that just because something was not lawful then it isn’t taxable.

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By Paul Crowley
16th Jun 2021 20:46

Dividends a prime example
Still you are a better man than I am as i have no idea what ROC means
https://en.wikipedia.org/wiki/Roc_(mythology)

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By Matrix
16th Jun 2021 20:55

Paul if you are able please would you give an update on the client and her barrister who said you should have claimed as I missed it, I asked on the revived SEISS thread today.

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By Paul Crowley
17th Jun 2021 09:10

Zero further contact
I hope they figured out how to claim the 4th, But the client was at the time putting into emails that she intended to stop trading.
Did not really want to start any more opportunity to give rise to friction. Barrister had claimed that she was helping a family friend.
Not sure that forwarding the intended cessation of trade email to Barrister would have been helpful, but useful to leave for later
The claims for SEISS would be way below my PII excess, so PII would have no incentive to argue

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By M G Weemys
16th Jun 2021 22:10

(Not too sure if you're serious ~ Registrar of Companies!)
I recognise that (e.g.) dividends can initially be "paid" illegally (eg with no available reserves) but Companies House is not involved afterwards to correct the situation so it's not the same issue as having something incorrect on the public record.

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By Paul Crowley
17th Jun 2021 08:59

By that do you mean companies house?

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Replying to Matrix:
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By M G Weemys
16th Jun 2021 22:19

If the issue of the share could not actually take place because the company has no legal ability/right to do so, then the transaction cannot be regarded as having taken place at all (in my view). Therefore, if it never "took place" there would be nothing to report to HMRC. The whole situation is more frustrating because the 2nd share was issued to the same person who already held the 1st so it would have achieved absolutely nothing (apart from serious headaches). The shareholder would have continued to hold 100% of the issued "B" shares!

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By Paul Crowley
17th Jun 2021 09:13

Is anyone objecting?

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By M G Weemys
17th Jun 2021 10:21

There has been no formal objection (or wouldn't have been) to a further share being issued, but that is not really the point, as the Articles would need to have been amended to enable it to happen as the 2nd allotment would have exceeded that permitted. Even if some kind of ratification proved possible, or other measures taken beforehand (e.g. change of M&A), the fact that the share was being issued to the same individual who held the 1 permitted share renders the whole process pointless. It achieves nothing and simply creates problems elsewhere (a lack of required filing of resolutions to change M&A, a new M&A document itself, the fact that HMRC would need to be involved etc. As a result, the fact that an allotment was not allowed, and should never have been attempted at that time, suggests that to recognise the whole transaction as void would appear to be the logical, and hopefully more correct, step.

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Replying to M G Weemys:
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By Paul Crowley
17th Jun 2021 11:53

Nobody outside the company will be in any way interested as nobody reads The memorandum and articles.

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By M G Weemys
17th Jun 2021 14:10

Unfortunately, I believe that you are right which makes the reality of this whole situation even more frustrating! Is it acceptable for a public record to knowingly remain uncorrected simply for such a reason and ignore the fact that the actual situation is not being reflected? I don't believe that inaction (by simply ignoring the filed document) can really be supported, much as I would like to as a (at least partial) way out of the problem! To do so would still leave "loose ends" as conflicting filed documentation would exist as the company would/should continue to disclose/consider only 1 "B" share to be in issue. A requirement to disclose a change in the capital structure to HMRC would be unnecessary because "nothing had actually happened". The only nagging problem is that an incorrect public record exists to which, as you say, nobody would probably pay any attention to. I can't deny the option is attractive ..... but I do have concerns over possible future consequences of that incorrect record even though I can't immediately see what they might be! (FYI the share has no rights attached, apart from receiving dividends, and has a max. value of £1 on a winding-up).

Many thanks for your responses which are all appreciated. Clients ..... who'd have 'em eh?

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