Following the implementation of the Companies Act 2006, all new limited companies must complete a statement of share capital to complete the incorporation process.
All companies must also provide a statement of capital when completing their Annual Returns and making subsequent changes to the share structure.
Statement of Capital – Initial Information
You must provide the following information in Part 3 of the IN01 (company formations form), and in subsequent company Annual Returns:
- Total number of company shares in issue
- The aggregate nominal value of these shares (i.e. the value of 100 £1 ordinary shares is £100).
- What amount remains unpaid (or paid) on each share
- Total number of shares in each share class (most small limited companies just have ‘ordinary’ shares).
- The aggregate nominal value of the shares in each share class.
- Any rights that are associated with ownership of each share class, such as voting rights, dividend preference rights, or who has the right to redeem the shares.
- The currency of the shares (GBP will be typical for obvious reasons).
- The names and addresses of the initial shareholders (and any new shareholders over time).
- Please note that there is no longer a limit to the amount of shares you can issue (i.e. the ‘authorised share capital’ ceiling which existed before 1st October 2009).
Statement of Capital – Making changes
In the future, you may decide to change the structure of the company’s share capital, to cancel, or to buy-back shares. In each case, you will need to inform Companies House of the changes.
To reduce the number of shares currently in issue, you should fill in Companies House Form SH19 (sections 644, 649).
To allot new shares, Form SH01 should be completed (subject to board approval, and as long is permitted by your Articles of Association).
You should ensure that you submit the relevant form to Companies House within one month of the changes taking place.
Stamp Duty is payable when you purchase shares (currently at 0.5%), and Capital Gains Tax (possibly subject to Entrepreneurs’ Relief) may be payable if you make a profit on the shares you sell.
If you want to transfer shares in your limited company, you should consult your accountant first, as there may be tax implications you should be aware of.
For more background to the Companies Act 2006, specifically changes to the way share capital information is captured, click here.