Shareholders’ Ordinary Resolution – Removal of Authorised Share Capital
Authorised share capital (ASC) was a concept under the Companies Act 1985. It was abolished by the Companies Act 2006. As a result, a company incorporated under the Companies Act 2006 will not have ASC in its constitution and can generally allot and issue unlimited shares, unless its articles of association include an express restriction.
This Shareholders’ Ordinary Resolution – Removal of Authorised Share Capital is designed for a specific transitional situation affecting certain companies incorporated under the Companies Act 1985.
What does Shareholders’ Ordinary Resolution – Removal of Authorised Share Capital do?
- Removes an authorised share capital restriction that was originally set out in a company’s memorandum of association under the Companies Act 1985.
- Records the members’ decision by ordinary resolution (whether passed at a general meeting or by written resolution).
- Produces an ordinary resolution that can be retained with the company’s records and filed at Companies House.
When should you use Shareholders’ Ordinary Resolution – Removal of Authorised Share Capital?
Under the Companies Act 1985, ASC operated as a restriction set out in a company’s memorandum of association. When the Companies Act 2006 took effect, the memorandum became a historical document of incorporation only, and that type of restriction was notionally treated as part of the company’s articles (by virtue of section 28 of the Companies Act 2006).
From 1 October 2009, a company incorporated under the Companies Act 1985 may remove any ASC restriction contained in its memorandum by ordinary resolution, in accordance with paragraph 42(2)(b) of Schedule 2 to the Companies Act 2006 (Commencement No.8 Transitional Provisions and Savings) Order 2008. This template applies to that situation only.
If, instead, a company incorporated under the Companies Act 2006 has included an ASC-style restriction in its articles and now wishes to remove it, that is a change to the articles and (like any other change to the articles) will require a special resolution. See Special Resolution - Amendment to Articles of Association.
What else you may need
- Explanatory Note – Changes to Articles of Association – if you are also making (or explaining) wider changes to the articles as part of a constitutional update.
- Board Minutes to Approve Amending Company Articles of Association – where the directors are also approving the process for a change to the articles that requires a special resolution.
- Written Resolution to Approve Amending Company Articles of Association – where the directors are approving the process for a change to the articles that requires a special resolution and the shareholder decision will be taken by written resolution.
Key filing point
The ordinary resolution must be filed with Companies House within 15 days after it is passed.
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