6. Share capital

Question 1

What if the shares have v high premium/expensively priced?

Answer 1

i) Share capital reorganization
s. 618 CA 2006 – in order to subdivide/reorganise shares, OR required.

• ## It may be necessary for the company to reorganise its share capital prior to flotation. E.g. XYZ plc valued at £2 million, share capital made up of 10,000 shares of £1 each = each share worth £200 per share (£199 premium), not v marketable for listed co. However, if each £1 share is subdivided to create 100 x 1 pence shares, each of those 1 pence shares would be worth £2, a much more marketable price for the company. This also gives the existing shareholders far greater flexibility as to how to deal with their shares and as to the percentage of the company they want to hold.

Question 2

How to issue new shares

Answer 2

• If primary issue being done as part of listing (in order to raise finance for the company), will need to pass standard share issue resolutions:
  • Check in AA that there is no cap on number of shares (may need SR to amend AA under s. 21 CA)
  • Authority to allot – OR under s. 551 CA, and board resolution approving allotment
  • Disapplication of pre-emption rights – SR under s. 570(1) CA