Share subdivision

Share subdivision

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Suppose we have a 2 person limited company, where each person owns one £1 share and is a director working in the company, paying themselves a low salary and extracting the rest through dividends.

Then one day, they wake up and decide that perhaps Alice is doing a bit more work than Betty and they want to push more of the profits in Alice's direction.

So they amend their articles and create A class ordinary 50p shares and B class 50p ordinary shares, and simultaneously split Alice's original £1 share into one redesignated Ordinary 50p share and one A class ordinary 50p share, whilst Betty's original share is split into a 50p Ordinary share and a B class 50p Ordinary share all shares ranking pari passu. 

So the company's share capital is still £2, but is now comprised of two 50p Ordinary shares, and one A class 50p share and one B class Ordinary share.

Do they need to fill in form 42?

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By tonycourt
14th Jun 2013 11:14

Yes a Form 42 entry is required at section 3c - "Conversion of securities on or after April 2012".

Sorry - not so sure on second thought - I'll take a closer look

Section 2  - acquisition of securities is the right place.

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