Sub-division and consolidation of shares
Sub-division and consolidation of shares

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

  • Sub-division and consolidation of shares
  • Sub-division and consolidation
  • Initial considerations on a sub-division or consolidation
  • Power to sub-divide or consolidate shares
  • Steps to be taken after a sub-division or consolidation

There are a variety of ways in which a company's share capital may be altered in accordance with the provisions of the Companies Act 2006 (CA 2006).

Sub-division and consolidation

It is possible to sub-divide or consolidate all or any of the share capital of a limited company pursuant to CA 2006, s 618.

An alternative method of sub-dividing and consolidating share capital is by scheme of arrangement approved by the court under CA 2006, Pt 26. This is a process generally used to restructure a company in an insolvency situation or to facilitate mergers and takeovers. For further information on schemes of arrangement, see Practice Note: Schemes of arrangement—nature and key statutory requirements.

The meaning of sub-division

Sub-division of share capital is a process by which a company limited by shares changes the structure of its share capital by increasing the number of shares it has in issue and decreasing the nominal value of each share. On a sub-division, the total nominal value of the company's issued share capital remains unchanged.

If a company with 1,000 shares of £1 each sub-divided on a 1:10 ratio, this would increase the number of shares to 10,000 and change the nominal value of each share to 10p. The number of shares owned by a shareholder would be higher, but the nominal value of each share

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