Reconversion of stock into shares
Reconversion of stock into shares

The following Corporate practice note provides comprehensive and up to date legal information covering:

  • Reconversion of stock into shares
  • What is stock?
  • Initial considerations when a reconversion of stock into shares is proposed
  • Consents
  • Class rights
  • Larger reorganisation or transaction
  • Power to reconvert stock into shares
  • Exercise of the power to reconvert stock into shares
  • Additional requirements for listed companies and AIM companies
  • Steps to be taken after a reconversion of stock into shares
  • More...

Reconversion of stock into shares

Coronavirus (COVID-19): Following the coronavirus (COVID-19) outbreak, some Companies House filing and other administrative procedures have been temporarily suspended or changed. For further details of the impact of COVID-19, see Practice Note: Coronavirus (COVID–19)—impact on company filing and administrative procedures.

A company limited by shares was permitted under the Companies Act 1985 (CA 1985) (now repealed) to convert all or any of its fully paid-up shares into stock and to reconvert that stock into fully paid-up shares of any denomination, provided its articles of association allowed this.

As of 1 October 2009, a company may no longer convert its shares into stock. However, limited company that has converted paid-up shares into stock before 1 October 2009 may reconvert that stock into fully paid-up shares of any nominal value in accordance with the statutory provisions set out in the Companies Act 2006 (CA 2006).

What is stock?

Stock is the aggregate of any number of fully paid shares that 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.

It has never been possible to validly issue stock directly, even against payment of the full nominal value in cash. Shares must first be issued and paid up in full, then converted into stock.

The historic reason

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