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Hanover Company Services, Ground Floor, One George Yard, London, EC3V 9DF, UK

Company Formation Specialists

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What is Share Capital?

The share capital of a company is the number of shares the company has issued to its shareholders. All limited companies must have at least one shareholder detailed on the incorporation documents. Issued shares are typically £1 each. If you would like your company to have a different denomination of shares, e.g. 1p or £2 etc, please contact us and we will be happy to arrange this. The share’s value indicates the amount the shareholder is liable to contribute (per share) if the company closes owing money. It is recommended that the shareholder pay the total sum due for their share/s (e.g. £1) to the company at the time it is issued.

You may add or transfer shares at any time. The details of all shareholders, along with the sum they paid for their share is available for the public to view at Companies House. This information is updated every year when the company files its Annual Return and is also required when filing certain forms, e.g. the SH01 (return of allotment of shares).

The number of shares issued also indicates the level of control the shareholder has in the company. A company that has one share is fully controlled by that shareholder (100% ownership). A company that has two shares issued by two separate shareholders is controlled equally (50% ownership each) etc.

Is there a maximum and minimum Share Capital?

All limited companies must issue at least one share on incorporation and may issue as many shares as it deems necessary. For every share it issues, each shareholder is liable to pay the sum attached to it (e.g. if you issue 100 shares worth £1 each to one person, that shareholder must pay the company £100).

A Public Company (PLC) may incorporate their company with one issued share. However, before it can start trading, it must have an issued share capital of at least £50,000, of which 25% must be paid up in full (along with any premium attached to the shares).

How are shares transferred to new owners?

To transfer shares in a private company, a seller must complete and sign the appropriate section of a 'stock transfer form' and pass it, together with the share certificate, to the new owner. The new shareholder’s details should be recorded in the company’s Combined Register, along with the number of shares they own. The date the former shareholder transferred their shares should also be recorded. If you have opted for us to hold the first share upon incorporation, we will include the Stock Transfer form in your pack. The name and address of the new shareholder should be entered on the form, which should be filed with the limited company’s records. You should then update your Combined Register to reflect the change.

Can my company arrange different share classes?

It is possible for your ltd company’s shares to be issued in different classes. There are several reasons why companies choose to do this; your accountant will be able to help you decide if your company needs different share classes. The main reasons for issuing shares in different classes are:

  • The company may wish to issue shares to friends or family, but retain full voting rights for the main shareholder/s.
  • A company may wish to have the power to distribute dividends at different rates. They therefore issue shares in different classes (e.g. A & B Class Shares) to enable different dividends to be agreed for each class.

We are able to assist you in arranging different share classes for your company. We recommend that you seek independent advice from your accountant or business advisor before requesting this service.

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