Share capital—glossary of terms A AIM A securities market owned and operated by the London Stock Exchange plc, with lighter entry requirements and continuing obligations than the main regulated markets. Formerly the Alternative Investment Market, now simply known as AIM. AIM company A company with a class of its shares traded on AIM. Acquisition accounting An accounting methodology where a buyer incorporates acquired assets and liabilities in its balance sheet at the date of acquisition, with any difference between the price paid and the fair value of the net assets acquired being purchased goodwill. Allotment Shares in a company are taken to be allotted when a person acquires the unconditional right to be included in the company’s register of members in respect of the shares (Companies Act 2006, s 558). Allotment is followed by the issue of the shares. Allotment authority The relevant authority under CA 2006, ss 549–551 giving the directors authority to allot shares in the company, or to grant rights to subscribe for, or to convert any security into, shares in the company. In a private company with only one class of shares the directors may allot shares unless prohibited from doing so by the articles of association. For all other companies such authority must be derived from express power in the articles of association or by a resolution of the company. Allotment of equity securities CA 2006, s
Different classes of share capital This Practice Note considers the nature of shares in a company and the classes into which they can be divided. If a company has shares of different classes, then class rights may exist and consideration needs to be given to: • whether those class rights can be, or have been, varied, and • the provisions which apply to class meetings in the Companies Act 2006 (CA 2006) For further information, see Practice Note: Class rights and variation of class rights. Meaning of 'share' The CA 2006 merely provides that a 'share' is a share in the company’s share capital. References to shares in the CA 2006 also include stock, unless there is a distinction made between shares and stock. Stock is the aggregate of any number of fully paid shares, which can be held without any regard to the original nominal amount of the shares. Stock can be transferred or split up into fractions, without any regard to the shares' nominal value. The historic reason why companies used to convert shares into stock is that, prior the Companies Act 1948, there was a requirement to give each share a distinctive number, which created administrative difficulties for companies. There was no equivalent requirement for stock. A company’s shares may no longer be converted into stock. However, stock created before 1 October 2009 may be reconverted into shares by way
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