62A. No par value shares

Question 1

62A. No par value shares

Answer 1

General overview
[62A.01] The abolition of the par or nominal value concept was made retrospective to all shares issued before and after January 30, 2006: s 62A(2). See CLFRC, Recommendation 2.17, October 2002.

Question 2

No par value

Answer 2

[62A.02] The Companies (Amendment) Act 2005 (No 21 of 2005) abolished the concept of par or nominal value in shares and the authorised capital. The par value is the minimum price at which shares can generally be issued. The capital maintenance rule prohibits companies from allotting shares at a discount to their par value. Where shares are issued above the par value, the excess is called the share premium and is separately accounted for. All shares in a class have the same par value. They are subject to s 71 where the shares may be consolidated into larger par value or subdivided into smaller par value

Question 3

Authorised capital

Answer 3

[62A.03] It is the ceiling on the maximum amount of capital and number of shares that a company may issue. An allotment in excess of the authorised capital is void: Bank of Hindustan, China & Japan Ltd v Alison (1871) LR 6 CP 222, Court of Exchequer Chamber. The concept of authorised capital has been abolished. The rule on capital maintenance will be discussed in s 76