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Share splits and reverse share splits, new content

November 2014
Shares must have a monetary value attached to them – the par or nominal value. Occasionally you may find it becomes necessary to alter the number of shares in issue in your company and their nominal value without changing the overall amount of share capital in issue. This could be in anticipation of a new shareholder arriving in your company or as part of a general share reorganisation. This is known as consolidating or sub-dividing share capital.

As part of our range of templates covering the share capital & profits of a company, we have added a new group of documents specifically to cover the situation where you may wish to split, consolidate or sub-divide the share capital of your company. Your company may, for example, have a share capital of £100 divided into 100 shares of £1 each and you may wish to consolidate or sub-divide this into, 1,000 10p shares, 10,000 1p shares or 10 £10 shares. In order to do this there is a set procedure that you must follow.

The new material added includes:

• A guidance note – consolidation & sub-division of share capital; to walk you through all the legal issues involved when there is a proposed share split or reverse share split; what it is, why it is done & the legal procedure involved;
Board minutes - to recommend the procedure subject to obtaining shareholder approval;
• A shareholders’ ordinary resolution - required in order to approve the share consolidation or sub-division following its recommendation at a board meeting; and
• The relevant Companies House forms which need to be filed after the procedure has been implemented.

As with all our share capital & profits documents, this new sub-folder of documents has been written for company directors, secretaries and administrators considering making changes to their company’s share capital structure.

The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.

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