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Share Capital & Issued shares Incorrect

Share Capital & Issued shares Incorrect

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On incorporation the sole trader set up a company with an incorrect share capital of £500,000 and allotted all 1000 x £500 ordinary shares to himself. This was over a year ago and the first annual return is now a month overdue. No money for the shares has been paid. As far as I can see this information will need to be declared on the return as per the original Articles and Memorandum to comply with the made up date (there were no changes during the year).

Secondly, to change the structure to a typical one man private company with him owning one £1 share I propose to subdivide the 1000 shares to 500,000 making them £1 each and then surrender 999 shares by agreement. I believe this will require ordinary written resolutions under CA2006, amending of share certificates, etc and a completed form 122 to Companies House accompanied by a statement of capital.

It is probably unnecessary to change the authorised share capital, even though it is rather high for a small company, as this appears to a be a more complex procedure.

Any comments would be welcome regarding procedures and pitfalls.
Stephen Quay

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By anita.ashah
28th Nov 2008 12:09

more queries on same subject
Can someone advise what the tax cosequences would be in this case?
And how would the share capital be reported in the accounts in the first period? And what are the tax consequences? Do you show the capital as "unpaid" under debtors?

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By petersaxton
20th Oct 2008 15:01

Yes it does matter.
If you surrendered 999 shares of the 1,000 and then subdivided them into 500 shares for each share you would be left with 500 £1 shares not one £1 share.

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By mikewhit
19th Oct 2008 22:51

Takeover due to reduction in share price ...
Had any offers from Lloyds TSB yet ?

;-)

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Stephen Quay
By squay
19th Oct 2008 18:32

Numbers
Peter, Yes, I mean surrender 499,999 of the subdivided shares to leave 1 share @ £1. However, I was also thinking at the time of surrendering 999 of the 1000 shares and then subdividng the 1000 shares to 500,000. Does it matter in which order it is done?

Am I right in assuming the overdue annual return must be submitted based on the current state at the made up date. The restructuring will done after the made up date.

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By petersaxton
18th Oct 2008 13:20

Numbers?
"I propose to subdivide the 1000 shares to 500,000 making them £1 each and then surrender 999 shares by agreement"
Do you mean 499,999?

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