Distributions[1] (dividends) are not guaranteed, they shall only be made from profits available for that purpose and where TWP's net assets are not less than the aggregate of its called-up share capital and non-distributable reserves.
Justification for declaring a dividend is usually determined by reference to the:
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INTERIM ACCOUNTS - subject to the Companies Act 2006, Section 838
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FINAL ACCOUNTS - subject to the Companies Act 2006, Section 837
Successive distributions on the same set of accounts are subject to Companies Act, Section 840 and relevant amounts are calculated as per Sections 841 to 844.
Distributions may also arise as a result of the sale, transfer or other disposition by TWP of a non-cash asset.
[1] Defined in Section 829 of the Companies Act 2006
Subject to the provisions of the Companies Act 2006:
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INTERIM DIVIDENDS - directors may pay interim dividends without members' approval.
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FINAL ACCOUNTS - directors recommend final dividends for the approval of the members.
Dividends are paid proportionately in accordance with the amounts paid up on the shares.
They are currently paid via online banking, but they can also be paid by cheque drawn in the name of and sent to the address of, the person entitled; or in the case of joint holders, to the first person named in the register of members.
The board of directors decides whether the dividend shall be satisfied wholly or partially from company assets; and may issue fractional certificates, may vest any assets in trustees and may fix the value for distribution to adjust the rights for members.
Unpaid dividends
Won’t attract interest payable by TWP unless provided by the rights of the share.
Unclaimed dividends
If the directors so resolve, dividends not claimed for 12 years shall be forfeited.
On the winding up of TWP, the liquidators can, with the sanction of an extraordinary resolution and any other sanction required by the Companies Act 2006, divide the assets of TWP between the members in the manner they see fit.
The liquidators can also vest all or any part of the assets for the benefit of the members.
A member shall not be compelled to accept any assets on which there is a liability.
Share capital is currently owned by the director of the firm and one external individual (a previous director of the firm).
10,000 shares with a nominal value of £1[1] were authorised on incorporation, and of these, the following have been issued:
Authorised Shares
The law regarding authorised and issued shares changed under the Companies Act 2006, the figure of 10,000 now acts as a limit to the number of shares which can be issued, unless removed by shareholder vote.
Subscriber Shares
The term ‘subscriber’ only applies to the first members who join a company upon its incorporation and whose names are listed on the memorandum of association.
[1] In compliance with Section 542 of the Companies Act 2006
Share
Rights Attached
Number Issued
Ordinary
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voting rights.
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right to return of capital upon wind-up; and
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right to dividends.
Subscriber = 0
Other = 3140
Preference
None Issued
Non-Voting
None Issued
Redeemable
None Issued
Redeemable Preference
None Issued
TWP has first and paramount lien on every share, whether fully paid or not, in respect of any money owed to TWP by the member.
TWP may sell the shares if the holder (or the person entitled to it following bankruptcy, death, etc) doesn’t repay the debt within 14 clear days of notice of the intended sale.
The net proceeds of the sale (after costs) shall be used towards repayment of the debt. Any excess shall be distributed to the person entitled to the shares upon TWP receiving the share certificate. The Share Certificate will then be cancelled.
The lien extends to the dividends on the shares. [1]
The board may authorise someone to execute an instrument of transfer of the shares sold to, or in accordance with the directions of, the purchaser. The title of the transferee shall not be affected by any irregularity in or invalidity of the proceedings in reference to the sale.
[1] Brief notes on Lien of shares, surrender of shares & forfeiture of shares (Balbir – PreserveArticles.com)
In addition, shareholders may enter into agreements amongst themselves, agreements which further define their rights and responsibilities - e.g. the transferability of shares or the rights of different categories of shareholding.
Currently there are no shareholder agreements in place
Shares can only be offered to an already connected person[1] and are deemed to be allotted when a person acquires the unconditional right to be included in TWPs register of members[2]. Shares shall not be allotted at a discount [Companies Act 2006, Section 580], but they can be allotted at a premium as long as the premium is held in TWPs share premium account.
An allotment shall be registered as soon as practical and within two months after the date of allotment and within one month TWP shall submit a return of the allotment to the registrar.
[1] The definition of an ‘already connected person’ can be found in Section 756 of the Companies Act.
[2] The details recorded in the members register are outlined in Section 790k of the Companies Act 2006 and is open to inspection by anyone without charge
By (members) special resolution:
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Subject to the Companies Act 2006, Part 17, Chapter 10, the share capital can be reduced. The resolution shall be supported either by a solvency statement [1] or a court order.
By (members) ordinary resolution:
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Subject to the Companies Act 2006, Sections 618 & 619, shares can be consolidated or divided into shares of larger or smaller amounts. The resolution should determine whether any of the new shares have any preference or advantage.
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Where members may become entitled to fractions of a share, the board may sell the share fractions (including to TWP) for the best price reasonably obtainable and distribute the proceeds amongst the entitled members. The board can execute an instrument of transfer and the transferee does not have the right to see how the purchase money is applied. Any errors on behalf of the board shall not affect the title of the transferee.
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Cancel shares which have not been taken, or agreed to be taken and diminish the share capital by the amount cancelled.
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Variation of share classes is subject to the Companies Act 2006, Part 17, Chapter 9.
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Issue new share capital, subject to Companies Act 2006, Part 17a, Chapter 2 and Chapter 3. Because we are a private limited company with only one class of share[2], Section 561 & Section 562 regarding pre-emption do not apply to us.[3]
Redeemable Shares
Redeemable Preference Shares
The board shall ensure the new director shall have access to all the information and material that they could reasonably expect to have to perform their responsibilities
Ordinary shares
Preference Shares
Non-Voting Shares
Any share may be issued with such rights or restrictions as may be determined by ordinary resolution - on condition they do not prejudice any rights attached to existing shares and subject to the provisions of the Companies Act, Part 17, Chapter 8.
TWPs Articles of Association state that:
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Shares must first be offered to existing Members in proportion, as close as possible in nominal value to the existing shares they hold.
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The Member shall be told the number of shares to which they are entitled and the expiry date of the offer, after which it will be deemed to have been declined.
Shareholders can vary the above by Special Resolution.
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Other alterations of share capital, including sub-division and redenomination, is subject to the Companies Act 2006, Part 17a, Chapter 8
[1] As per Section 643 of the Companies Act 2006
[2] The definition of one class of share can be found in section 629 of the Companies Act 2006
[3] The Companies Act 2006 replaced the Companies Act 1985 to which TWPs Articles of Association refer.
Shares cannot be held on trust (unless required by law or the articles) and only the absolute right to the entirety of the share shall be recognised by TWP.
Subject to the Companies Act 2006, Part 18, Chapter 4, TWP can purchase its own shares (including redeemable shares) - payment doesn’t have to be made from distributable profits or the proceeds of a fresh share issue.
Share Certificates
Share certificates will be issued within two months of the allotment date. A certificate is valid when sealed with the company seal and it shall specify the number of shares, class, any distinguishing numbers of the shares and the amount(s) paid thereon.
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All shareholders are entitled to one certificate for all shares they hold in each class without charge; also when alterations to their shareholding are made through transfers, sales, etc. In the case of jointly held shares, one certificate shall be issued and sent to one of the joint shareholders.
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Shareholders can purchase additional certificates and the directors shall decide on a reasonable payment for this service.
In the event a certificate is lost, defaced or destroyed, it can be renewed free of charge unless TWP incurs expenses in relation to indemnity and investigating evidence of the member’s claim; in which case the expenses shall be charged to the member.
Payment for Shares
Calls for payment:
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can be made, subject to the terms of allotment in respect of any money unpaid on a member's share(s) - whether in respect of nominal value or premium and joint holders of a share are jointly and severally liable for a call for payment on their share(s).
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shall be deemed to have been made at the time the director’s resolution authorising the call was passed and amounts payable on allotment or at a fixed date shall be considered a call, and non-payment treated in the same manner.
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terms for payment can be different for each shareholder on whom a call is made.
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can be required to be paid in instalments.
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can be revoked or postponed in part or whole before payment has been made. Where postponed, the person on whom the call has been made remains liable even if their shareholding is subsequently transferred.
Notice to Members:
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members shall be given at least 14 days’ clear notice, in writing and specifying when/where payment is to be made.
Non-Payment:
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interest[1] shall be charged on the outstanding amount in line with TWPs articles of association.
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if the call remains unpaid then the board may at least 14 days’ clear notice, asking for payment of the call and interest in line with TWPs articles of association. If the notice is not complied with, the shares on which the call was made may be forfeited by resolution of the board; and the forfeiture shall include dividends and any other money payable on the shares, but not paid before the forfeiture.
Forfeiture
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A forfeited share can be sold, re-allotted or disposed of in any such manner that the board see fit, including to the forfeiting holder and subject to Companies Act, Chapter 2.
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To facilitate a shares disposal, the board may authorise some person to execute an instrument of transfer (see below).
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The holder of the forfeited shares shall cease to be a member and shall return their certificate to TWP for cancellation, their debt shall remain payable and interest shall continue to accrue on the outstanding balance.
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The board can waive payment partly or wholly or can enforce payment without consideration of the share disposal proceeds.
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The forfeiture can be cancelled by the board on whatever terms they see fit.
On death of a shareholder (member)
If a member dies, TWP will only recognise as having any title to the share(s):
Upon producing evidence of their entitlement, the person entitled may request to become owner of the share(s), or may execute an instrument of transfer to another person – see ‘share transfer’ above. The person entitled shall have the members rights, except they are not able to vote or attend a meeting until they are registered as owner. They shall also be bound by any notice which has been given to the person from whom they derive their title.
The members estate shall remain liable for any debt the member owes TWP, joint owners are not liable for each other’s debts.
On bankruptcy of a shareholder (member)
TWP will only recognise the members’ personal representatives as having any title to the share(s):
Upon producing evidence of their entitlement, the person entitled may request to become owner of the share(s), or may execute an instrument of transfer to another person – see ‘share transfer’ above.
The member shall remain liable for any debt they owe TWP, joint owners are not liable for each other’s debts.
[1] Companies Act, Section 592 confirms the statutory rate
Joint shareholders
the surviving joint shareholder(s).
Sole shareholder
the members personal representatives
Shares are transferrable, subject to certain conditions (see Companies Act 2006, Section 544) and subject to the consent of the board.
Where the transfer is accepted by the board of directors, it shall be registered and the instrument of transfer retained by TWP.
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The instrument of transfer can be in any form determined by the board, subject to the Companies Act 2006, Part 21; and no charge shall be made for its registration.
Suspension of Transfers
The board can suspend the registration of share transfers for up to 30 non-consecutive days in any year.
Refusal of Transfer
The board must refuse a transfer:
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where the sale is not to an already connected person[1] [2] because that is prohibited by law.
The board may refuse a transfer:
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in their absolute discretion and do not need to give a reason for doing so.
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if the instrument of transfer isn’t lodged at TWP’s registered office and accompanied by the certificate for the shares being transferred, along with any evidence TWP requests to prove the right of the transferor to make the transfer.
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if it’s in respect of more than one class of shares.
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if it’s in favour of more than four transferees.
If the board refuses a transfer, they will send a notice to the transferee within two months and the refused instrument of transfer shall be returned to the person lodging it.
[1] Definition of an ‘already connected person’ can be found in Section 756 of the Companies Act.
[2] Companies Act, Part 20, Chapter 1 prohibits the sale of our firms shares to the public. The. The definition of ‘public’ is explained in Section 756.