7 Reasons To Outsource Your Company Secretarial Function eBook

Corplaw Blog

Methods Of Changing Share Capital

Posted by Corplaw Admin on Mar 4, 2014 9:32:00 AM

Methods Of Changing Share CapitalThere are various methods of changing both the authorised and issued share capital in Irish companies. A common transaction would be the allotment of shares. Whilst the redenomination or consolidation of shares are options which do not commonly occur on a day to day basis, these methods can be quite effective where particular amendments to share capital are concerned.

Allotment Of Shares

The first method of changing share capital is the allotment of shares. An allotment of shares is where newly issued shares are allocated to the shareholders by the directors of the company. To allot shares, there is certain information that will need to be known about the allottee. This includes such items as name, address, amount of shares to be allotted and whether these shares will be for cash or non cash consideration.

Directors’ authority to allot shares should be reviewed to ensure the correct authority is in place. The Memorandum and Articles of Association should be referred to in this instance.

Consolidation Of Shares

This is a conversion of a number of shares of a certain nominal value into a smaller number of shares of a larger nominal value. In this instance, there are numerous things that can happen. An Extraordinary General Meeting (“EGM”) may be called to pass an ordinary resolution consolidating the shares, or a written resolution of the directors will be completed to recommend to the shareholders that the shares be consolidated. Once the resolution approving the consolidation of shares has been passed, a Statutory Form 28 will need to be completed and filed with the Companies Registration Office.

Selecting The Appropriate Method

The methods of changing share capital above should be used appropriately depending on the particular situation and with a clear view of the end result in mind.

Finally, it is important to remember that when dealing with any changes to the share capital, the Memorandum and Articles of Association should be referred to for initial direction prior to completing a transaction.

Shares

Topics: Ireland, Legal, Shareholders, Shares