Change of Share Currency

November 2018

Shares must have a monetary value attached to them – the par or nominal value. Occasionally you may find it becomes necessary to alter the currency of a company’s share capital or a class of shares in issue. This is known as redenominating share capital.

Section 542 of the Companies Act 2006 expressly provides that shares in a limited company may be denominated in any currency and different classes of shares may be denominated in different currencies. The Companies Act provides that shares may be redenominated from one currency into another by ordinary resolution unless the articles restrict use of this power (section 622).

As part of our range of templates covering the share capital & profits of a private limited company, we have added a new group of documents specifically to cover the situation where you may wish to redenominate the share capital of your company. The documents take you through the legal process involved and the documents required at each stage. Note that following a share redenomination, a company also has the option to reduce its share capital. However this is only for the purpose of rounding the redenominated nominal values to values which are more suitable.

The new material added includes:

  • A guidance note – to walk you through all the legal issues involved when there is a proposed share redenomination; what it is, why it is done & the legal procedure involved;
  • Board minutes - to recommend the procedure (and subsequent share capital reduction) subject to obtaining the necessary shareholder approvals;
  • Shareholders’ resolutions (passed as written resolutions or in general meeting) - required in order to approve the share redenomination (and subsequent share capital reduction);
  • Directors’ confirmation – in relation to the share capital reduction; and
  • The relevant Companies House forms which need to be filed after the procedure(s).

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. We have not considered the tax or accounting implications that may be relevant. Independent legal advice should be considered when undertaking any currency conversion

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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