A Review of the Companies Act 2006

Shane C Morris

Solicitor – Corporate Commercial Law

SILVERMAN SHERLIKER LLPSOLICITORS

Topics

1. Statements of Capital

2. Pre-emption Rights

3. Reductions of Capital

4. Share Buybacks

5. Financial Assistance

6. Other Changes

Statements of capital

• A snapshot of a company’s share capital at the time it is filed.

• Rights Attaching to shares– How much detail do you need to provide?

• The following will usually suffice:• “each share is entitled to one vote in any circumstances”• “each share is entitled pari passu to dividend payments or

any other distribution”• “each share is entitled pari passu to participate in a

distribution arising from a winding up of the company”

• Amount paid up on each class of share including any premium– BIS - Adopt a practical approach– ICSA - Divide the total amount in their share

premium account by the number of shares in issue

Pre-emption Rights

• Prevent dilution of existing shareholders and give a right of first refusal

• There are two types of pre-emption rights:1. Statutory rights on an issue of new shares

2. Rights on a transfer of existing shares- Usually in the Articles or a shareholders’

agreement

Reduction of Capital• Reasons why a company may choose to reduce its

capital

• Preliminary Considerations

• Procedure for Reducing Share Capital Supported by a Directors’ Statement

• Maintenance of Capital

Share Buybacks for Private Companies • Reasons for Buyback

• Preliminary considerations

• Limitations

• Procedure for Buyback Out of Profit

• Procedure for Buyback Out of Capital

Financial Assistance

• Position under the 1985 Act– Prohibited, except if whitewash procedure used

• Position under the 2006 Act– Prohibition repealed

– Considerations

Other Changes • Authorised Share Capital

• Memorandum

• Model Articles

• Natural Person – 1st October 2010

• Directors’ Addresses

Contact Details

Shane C Morris

Email: scm@silvermansherliker.co.uk

Tel: 020 7749 2700

SILVERMAN SHERLIKER LLPSOLICITORS