ACCA F4 - Corp and Business Law (ENG)

Part E Capital and the financing of companies  15: Share capital 235

3.6 Statement of capital and initial shareholdings

A return known as a statement of capital and initial shareholdings is required to be made to the

Registrar when a company is registered, and therefore applies only to the shares of the subscribers. This

statement must give the following details in respect of the company’s share capital and be up to date as

of the statement date.

(a) The total number of shares of the company

(b) The aggregate nominal value of the shares

(c) For each class of share:

(i) The prescribed particulars of any rights attached

(ii) The total number of shares in the class

(iii) The aggregate nominal value of shares in the class

(d) The amount paid up and the amount (if any) unpaid on each share, either on account of the

nominal value of the share or by way of premium.

(e) Information that identifies the subscribers to the memorandum of association.

(f) In respect of each subscriber, the number, nominal value and class of shares taken by them on

formation and the amount to be paid up.

4 Allotment of shares

Directors exercise the delegated power to allot shares, either by virtue of the articles or a resolution in

general meeting.

4.1 Definition

Allotment of shares is the issue and allocation to a person of a certain number of shares under a contract

of allotment. Once the shares are allotted and the holder is entered in the register of members, the holder

becomes a member of the company. The member is issued with a share certificate.

The allotment of shares is a form of contract. The intending shareholder applies to the company for

shares, and the company accepts the offer. The terms 'allotment' and 'issue' have different meanings.

(a) A share is allotted when the person to whom it is allotted acquires an unconditional right to be

entered in the register of members as the holder of that share. That stage is reached when the

board of directors (to whom the power to allot shares is usually given) considers the application

and formally resolves to allot the shares.

However if the directors imposed a condition, for instance that the shares should be allotted only on

receipt of the subscription money, the allotment would only take effect when payment was made.

(b) The issue of shares is not a defined term but is usually taken to be a later stage at which the

allottee receives a letter of allotment or share certificate issued by the company.

The allotment of shares of a private company is a simple and immediate matter. The name of the allottee

is entered in the register of members soon after the allotment of shares and they become a member.

4.2 Public company allotment of shares

There are various methods of selling shares to the public.

Public offer: where members of the public subscribe for shares directly to the company.

Offer for sale: an offer to members of the public to apply for shares based on information in a prospectus.

Placing: a method of raising share capital where shares are offered in a small number of large 'blocks', to

persons or institutions who have previously agreed to purchase the shares at a predetermined price.

Key term

Key terms

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