Correcting share allocation screw up

[steve.metzler]

Need some advice on correcting an on-going screw up I made when setting up my company. (I know my accountant can fix it but at a cost that may not be in line with the problem.)
I registered my company on-line and set-up myself, my wife and a friend as directors originally. It appears I capitalised the company with 1,000 shares (£1 par). That's fine. However, a very few days afterwards the friend got cold feet and asked to resign as company director. She has been removed from the list of directors without problem. What I did not realise was the shares had been equally allocated to all three directors. When I processed last years annual return, I tried to "correct" the share information using Companies House on-line. I had tried to -I guess- revised the share allocation which can't be done on the Annual return filing. I let it slide. Now it's annual return time again. The shares are worthless but I'f like to "correct" this. What the easiest way? Do I have to get a written share transfer from the ex-director and do the stamp duty bit even though the shares are worthless?

 

[Alpha]

Firstly you need a stock transfer form for your friend to complete which will legally authorise the transfer. Under the section asking about the type of transfer you declare option L (gifting of the shares).

That covers the legal requirement from the individuals perspective.

You will then correct the share allocation on the annual return in the shareholder information section. There will be a transfer of shares from one party and an increase in the shareholding of the other party(ies).

The same applies whether done online or via the paper version.

 

[steve.metzler]

I must be a bit thick on this subject. Either I did not explain it quite right, or maybe 'cause I'm American and the definition of shares means something different I'm still confused about this. Your solution seems to me to only further document (by filing a share transfer) a non-existing condition. Let me try again.

Current Section 4 of this years 363a shows the three of us jointly owning the only shares (1,000). At the top of the form it says "if any details have changed...fill in the details in the "Amended details" or "Shares transferred" column. That sounds encouraging, but not knowing how to fill that part out is probably what caused this screw-up in the first place.

Firstly, the ex-director does not have any shares (physical pieces of paper) to transfer on a Share Transfer document - as I would have to do if I was selling stock shares in say GM or IBM.
Secondly, the filed "Report of the Director and Unaudited Financial Statement" for previous 2 years state the 1000 shares are allocated 900 to me and 100 to my wife - which is fine by me, as that was the intended all along. It seems to me that I just screw-up the last 363a filing somehow. I seem to remember that, after CH rejected the first paper 363a last year, I tried to sort it out on the phone. After I confused the CH person on the phone enough, he/she explained that if I did thefiling on-line the application would edit check my entries and if it went through I would be "OK." Mmmm, seems I found a flaw, i.e., stupid people can get by edits if they don't quite understand what they are doing.

I really appreciate your response, but something does not seem right about the solution yet.

 

[Alpha]

It is not your definition of shares which is causing confusion it is the statement of how the shares have been issued.

What I did not realise was the shares had been equally allocated to all three directors.

This statement would mean to any person that the three of you own 333 shares each (with the odd one through mathematical rounding being owned by one person)

You now appear to be saying that the three of you jointly own the 1000 shares.

Current Section 4 of this years 363a shows the three of us jointly owning the only shares (1,000)

Which version is it?

I would really suggest that you pay your accountant to sort it out as they can physically see what is on the document and will know what needs to be done.

It was by trying to save a few pounds that you caused this problem in the first place!

Firstly, the ex-director does not have any shares (physical pieces of paper) to transfer on a Share Transfer document - as I would have to do if I was selling stock shares in say GM or IBM.

Whether you have physical pieces of paper or not to prove the existance of shares(which you really should have anyway but not everyone does issue them physically) the legal way to transfer share ownership is to complete a staock transfer form.

 

[steve.metzler]

Alan, as you suggest, I think I will have my accountant sort it out.

From your reading of my response I get the feeling that my confusion stems from the difference between (or method of) the company issuing shares (which it did, a total of 1,000 at start up) and allocating shares (which I - or any other director - never intended to do) and how that got turned into joint ownership of these shares.

Thanks for the input anyway