Help on filling out the Alloting Shares SH01 form

[rps1969]

Can someone offer me some help on filling out the Alloting Shares SH01 form.

This is the current situation. My partner is the director of our company and I am the majority shareholder by was of 2/1 split.

She now wants me to become a director, but as I’m going to invest more of my hard earned cash we have agreed to increase my share capital to 20/1 split.

We have filed in the AP01 appointment of director form for me but filling out the SH01 form is a bit of a nightmare.

There is NO cash changing hands for these shares

We need help in filling out section 3 “Shares Alloted” and advice on “Details of non-cash consideration” whatever that means

We need help in filling out section 4 “Statement of capital”

We need help in filling out section 6 “Statement of capital (Totals)”

Any help would be greatly received.

 

[rps1969]

Can anyone offer some advice?

 

[MrMichael]

The most straightforward way to effect the change would be to arrange for the company to issue 18 shares to you (assuming the actual figures are 2 shares for you, and 1 to your partner, at present).

The company will have share capital from which shares can be issued from. It is likely that this is made up of £1 shares (or rather that the existing shares are £1 shares). If this is the case, you should pay the company £18 or at least pay a portion of the sum with the remainder to follow. You should check the position though in your existing documentation.

Statement of capital in section 4 will outline all issued shares so 21 in total post-issue. Section 6 doesn't need to be completed assuming there is only one denomination of shares.

The process should all be minuted as well so you have clear records of what took place and why the allotment was made.

I'm sure your accountant would be able to assist with the above if still in doubt. If you are investing money into the company then this is effectively the cash consideration that is flowing to the company in return for the issue of shares, so you may want to think about reflecting this premium in box 3 of the form.

 

[Epitome Law]

MrMichael makes some sensible comments, but if you don't know what you are doing you need to get help, and I think it's unlikely that anyone is going to be able to steer you through it on a forum. There are too many thing you have to think about. For example, whether the directors have the authority to allot new shares, preemption rights, ensuring you minute what you are doing and recording matters in the company's books.

Get help from a lawyer or accountant.

 

[mahutchinson]

Although you can transfer shares as a gift for nil consideration you cannot issue shares for nil consideration. At the very least the nominal value of the shares is owed to the company and until paid (called up by the company) the nominal value of the issued shares will have to be shown as a debt on the balance sheet.

Of course, each share may be worth a lot more than the nominal value if the company is successful or has valuable assets. If that's the case then shares purchased at nominal value and sold at market value may give rise to capital gains tax.

A final point - the dilution of the minority shareholder's powers is quite significant. A third shareholding allows blocking of special resolutions (75% majority needed to vote) covering most major changes to the company. A holding of one twentieth of the shares has no power at all, apart from to receive a dividend, if any.