Q&As

Is it possible to alter the terms of issue of shares (eg payment terms for partly paid shares) and, if so, is shareholder approval or a deed of variation required?

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Published on LexisPSL on 20/12/2016

The following Corporate Q&A provides comprehensive and up to date legal information covering:

  • Is it possible to alter the terms of issue of shares (eg payment terms for partly paid shares) and, if so, is shareholder approval or a deed of variation required?
  • Companies Act
  • Share rights and liabilities under the articles
  • Amending a shareholders’/subscription agreement
  • Other considerations

The answer to this question will depend on a number of factors and circumstances that will be specific to each situation, including the status of the company, whether the partly paid shares in question constitute a separate class of shares and whether there are other holders of partly paid shares whose payment terms are not proposed to be changed, as well as on the provisions of a company’s articles and any relevant shareholders’ agreement.

Companies Act

It is worth starting out with section 581 of the Companies Act 2006 (CA 2006), which applies to both public and private companies, and states that:

'A company, if so authorised by its articles, may…make arrangements on the issue of shares for a difference between the shareholders in the amounts and times of payment of calls on their shares.'

For further information see Practice Note: Allotment and issue of shares—private companies with more than one class of share and public unlisted companies.

Share rights and liabilities under the articles

In the light of CA 2006, s 581, it would be usual f

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