Company's Finance - Shares
Shares
What are Shares
s540(1) - 'Share in the company's share capital'.
s541 - An item of property: 'Shares ... of a member in a company are personal property.'
Piece of a company - Unit of account for measuring shareholder's interest and investment i
Each piece represents a certain percentage of the company.
Commissioners of Inland Revenue v Crossman [1937]: Share in an item of property which c
and obligations which are defined by the Companies Act and by the memorandum of assoc
💡 Shares do not give shareholder proprietary right over the assets of the company - Bo
Co Ltd [1901].
Although a shareholder may own 50% of the shares in a company, will not be entitled to
assets.
Once shares allotted and issued, do not belong to company anymore but to the shareholde
Property - Can be transferred from person to person according to the process of transfe
association s544.
Value
Nominal - Each share in company limited to shares must have normal or par value - s542.
Number is arbitrary and settled on incorporation of company.
Nothing to do with how much the share is actually worth or sold for.
Old legal and accounting concept and number will appear on company's books.
Anyone who purchases shares in company must pay at least this amount.
Typically quite low - E.g., £1.
Market - The amount of money the market is willing to pay for the share.
Number will constantly fluctuate depending on the market.
E.g., nominal value of the share is £1 and the market value of the share is £2.
Share premium - Companies selling shares at more than nominal value.
Share with nominal value of £1 may not be issued for market value of £2.
, Allotted, Issued and Unissued.
Authorised - Represents maximum nominal value of shares that can be allotted.
Allotted share capital - Total nominal value of shares that have can be allotted.
s546(1)(b).
Once allotted - Shares have been registered to member in register of members.
Issued - The total nominal value of shares that have actually been issued & registered
s546(1)(a).
Unissued - The difference between the authorised and issued share capital.
Companies that have no authorised share capital limitation will not have unissued s
💡 Whites Ltd has allotted 3 million shares with nominal value of £3 each.
Allotted share capital - £9 million.
Company's allotted share capital cannot exceed authorised share capital - If it exist
Paid-Up, Called-Up, and Uncalled
Shareholders may not be required to pay fully for shares upon allotment.
May allow shares to be partly paid up - Payment made is less than the nominal value
later date or in instalments.
Combined total of nominal share capital that has actually been paid - Paid-up share ca
Whites Ltd has allotted and issued 1,000 shares with a nominal value of £1 each. (
£1,000.
Allows allotters to pay 50p on allotment and remainder to be paid at later date spec
All 1,000 shares allotted and purchased, each shareholder pays required 50p per s
Paid-up capital - £500.
Shares not fully paid for - Company may call for any outstanding amounts to be paid or
Paid-up share capital plus amount called for or due - Known as the 'called-up shar
Company calls for additional 25p per share to be paid.
Paid-up share capital + (Number of shares allotted x Amount called for)
Additional 25p on 1,000 shares - £250 being called for.
Adding this to already paid-up share capital - £500; called-up share capita
💡 Amount called for forms part of the called-up capital, regardless of whe
Shares
What are Shares
s540(1) - 'Share in the company's share capital'.
s541 - An item of property: 'Shares ... of a member in a company are personal property.'
Piece of a company - Unit of account for measuring shareholder's interest and investment i
Each piece represents a certain percentage of the company.
Commissioners of Inland Revenue v Crossman [1937]: Share in an item of property which c
and obligations which are defined by the Companies Act and by the memorandum of assoc
💡 Shares do not give shareholder proprietary right over the assets of the company - Bo
Co Ltd [1901].
Although a shareholder may own 50% of the shares in a company, will not be entitled to
assets.
Once shares allotted and issued, do not belong to company anymore but to the shareholde
Property - Can be transferred from person to person according to the process of transfe
association s544.
Value
Nominal - Each share in company limited to shares must have normal or par value - s542.
Number is arbitrary and settled on incorporation of company.
Nothing to do with how much the share is actually worth or sold for.
Old legal and accounting concept and number will appear on company's books.
Anyone who purchases shares in company must pay at least this amount.
Typically quite low - E.g., £1.
Market - The amount of money the market is willing to pay for the share.
Number will constantly fluctuate depending on the market.
E.g., nominal value of the share is £1 and the market value of the share is £2.
Share premium - Companies selling shares at more than nominal value.
Share with nominal value of £1 may not be issued for market value of £2.
, Allotted, Issued and Unissued.
Authorised - Represents maximum nominal value of shares that can be allotted.
Allotted share capital - Total nominal value of shares that have can be allotted.
s546(1)(b).
Once allotted - Shares have been registered to member in register of members.
Issued - The total nominal value of shares that have actually been issued & registered
s546(1)(a).
Unissued - The difference between the authorised and issued share capital.
Companies that have no authorised share capital limitation will not have unissued s
💡 Whites Ltd has allotted 3 million shares with nominal value of £3 each.
Allotted share capital - £9 million.
Company's allotted share capital cannot exceed authorised share capital - If it exist
Paid-Up, Called-Up, and Uncalled
Shareholders may not be required to pay fully for shares upon allotment.
May allow shares to be partly paid up - Payment made is less than the nominal value
later date or in instalments.
Combined total of nominal share capital that has actually been paid - Paid-up share ca
Whites Ltd has allotted and issued 1,000 shares with a nominal value of £1 each. (
£1,000.
Allows allotters to pay 50p on allotment and remainder to be paid at later date spec
All 1,000 shares allotted and purchased, each shareholder pays required 50p per s
Paid-up capital - £500.
Shares not fully paid for - Company may call for any outstanding amounts to be paid or
Paid-up share capital plus amount called for or due - Known as the 'called-up shar
Company calls for additional 25p per share to be paid.
Paid-up share capital + (Number of shares allotted x Amount called for)
Additional 25p on 1,000 shares - £250 being called for.
Adding this to already paid-up share capital - £500; called-up share capita
💡 Amount called for forms part of the called-up capital, regardless of whe
