ACCA F4 - Corp and Business Law (ENG)

Part E Capital and the financing of companies  15: Share capital 229

A member ceases to be a member in any of the following circumstances.

 They transfer all their shares to another person and the transfer is registered

 The member dies

 The shares of a bankrupt member are registered in the name of their trustee.

 A member who is a minor repudiates their shares.

 The trustee of a bankrupt member disclaims their shares.

 The company forfeits or accepts the surrender of shares.

 The company sells them in exercise of a lien

 The company is dissolved and ceases to exist.

1.4 The number of members

Public and private companies must have a minimum of one member. There is no maximum number.

Public and private companies must have a minimum of one member. There is no maximum number.

Where a company has a sole member, the following rules will apply.

(a) The register of members must contain a statement that there is only one member and give their

address.

(b) Quorum. The Act automatically permits a quorum of one for general meetings.

2 The nature of shares and capital

A share is a transferable form of property, carrying rights and obligations, by which the interest of a

member of a company limited by shares is measured.

2.1 Shares

A share is the interest of a shareholder in the company measured by a sum of money, for the purpose of a

liability in the first place, and of interest in the second, but also consisting of a series of mutual covenants

entered into by all the shareholders inter se.

The key points in this definition are:

 The share must be paid for ('liability'). The nominal value of the share fixes this liability, it is the

base price of the share eg a £1 ordinary share.

 It gives a proportionate entitlement to dividends, votes and any return of capital ('interest').

 It is a form of bargain ('mutual covenants') between shareholders which underlies such principles

as majority control and minority protection.

A share's nominal value is its face value. So a £1 ordinary share for instance, has a nominal value of £1.

No share can be issued at a value below its nominal value.

A share is a form of personal property, carrying rights and obligations. It is by its nature transferable.

A member who holds one or more shares is a shareholder. However some companies (such as most

companies limited by guarantee) do not have a share capital. So they have members who are not also

shareholders.

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