Changing Company Shares
 

 

Changing Company Shares

 

Adding or removing a shareholder

Redistributing existing shares to reflect a change in ownership

Adding a new class of shares to issue shares with differing rights

Cancelling or changing existing shares

During the life of a UK company it is often necessary to change the share structure. Shareholders come and go, dividend payments may need to be flexible or the rights of shares may need adjusting.

When a company is formed shares are issued to the subscribing shareholders. These shares may be held for many years without being changed. Increasingly more companies are now restructuring the share allocation as the company grows. Changing the shares in a UK company can provide greater flexibility over profit distribution, ownership, voting rights and payment of dividends. 

Share Change

Increasing your share capital

The share capital of a company can be increased by just a single penny or millions of pounds. To increase the share capital in a UK company you have to file form SH01 at Companies House.

Share Transfer

Share Transfer

Shares are transferred using a stock transfer form. HMRC must also be notified if shares are transferred for any value, monetary or otherwise, as you may be liable for stamp duty. Companies House are officially updated with the new shareholders when the next Confirmation Statement is filed.

Share Change

Share Reclassification

Form SH01 can also be used to add or change existing share classes. Each share class has a unique set of voting rights attached to them so, for example, A class shares may have voting rights and full rights to dividends whereas B class shares may not have any voting rights but the shareholders are still entitled to dividends.

Share change

Share Reduction

If permitted by the articles of association a company may be able to file form SH03 to 'buy back' the existing share capital effectively reducing the number of shares.

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  • Example 1: Share increase
  • Example 2: Share transfer
  • Example 3: Share reclassification

Share increase

You may have two shareholders who are equal owners and hold 50 X £1 shares each. If they wish to add a third shareholder who is an equal partner they can issue a further 50 X £1 shares which means all shareholders own 50 shares at a value of £1 per share which reflects they own a third of the company each. 

Share transfer

You may have two shareholders with an equal holding of 50 x £1 shares each in the company . The two shareholders may reach an agreement to redistribute the shares so one has 75% and the other 25% to reflect a change in ownership. In this case shareholder A would simply transfer 25 of their 50 x £1 shares to shareholder B.

Share Reduction

If a shareholder leaves the company and the current shareholders do not wish to transfer the shares into their name they may decide to remove the shares held by the departing shareholder. Using the example above, if there are three shareholders who own 50 X £1 shares each and one person no longer wants to hold the shares the company may remove the 50 shares so the remaining two shareholders still each own 50 shares reflecting their 50% ownership. 

Finding and completing the correct forms to achieve the changes you want can be tedious and frustrating. Our knowledgeable team of advisors have a wealth of experience with share capital amendments and we will ensure we find the best approach to your suit your needs.

Most share changes are completed in one working day subject to the complexity and we will ensure all documents are correctly completed and duly filed. We can also draft meeting minutes and resolutions ready to be signed as well as creating share certificates where applicable.

Contact us today with your requirements and we will happy to provide an accurate quote for our services.

 

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Please note Companies House processing times are an estimate only and not guaranteed.

Simple Formations is a trading name of Small Firms Services Limited. We have been trading since 1998 and are one of the UK's longest standing Company Formation Agents

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