Board of directors

The management of a limited company is usually controlled by the board of directors as a whole and not individual director.

Formal meetings often dispensed with and the board can delegate its powers to one or more board members and appoint a managing director.

They are different types of directors can be appointed.

Part time directors

Part time directors are also known as non-executive directors. They are normally with financial, legal or technical expertise that of huge contribution to the company growth.

Alternate directors

Alternate directors who speak and act on behalf of board of members in their temporary absence can be appointed if you have an appropriate provision in the Articles.

Nominee directors

Nominee directors are appointed to represent substantial shareholders. They must not act solely in their principal’s interests but, like any other director, in the interests of the company as a whole.

Shadow directors

Shadow directors are persons in accordance with instructions the directors are accustomed to act and they have the same duties and obligations as any other directors.

Your directors appointments must be entered in your Register of directors.

Shares allotment

You may increase your company’s share capital by allotting shares. The UK company law requires your company director to deliver the form SH01 to Companies House within one month of your shares allotment event took place. You must include your statement of capital with your SH01 form.

Paid and Unpaid shares

You must specify the amount of shares paid in cash and unpaid in your shares allotment form.

Non cash consideration for the shares allotted

If your shares allotted fully or partly for non-cash consideration, you must show the extent to which your company have treated the shares as paid up on your form SH01 and you must also include a brief description of the non-cash payment for the shares.

Series of allotment

You can notify a series of allotments on the same form SH01, but you must send your form SH01 to Companies House no later than one month after the date of the first allotment. If you do this, the statement of capital should reflect your company’s position following the last allotment.

Bonus Shares

Your company must notify the allotment of your bonus shares to Companies House by delivering the form SH01. It should show the amount paid on each share as nil or zero and the shares as paid up otherwise than in cash.

Allotment of shares by unlimited company

An unlimited company only needs to notify Companies House if it is allotting a new class of shares i.e. class of shares which have rights that differ in any way to any previously allotted shares. You must complete and deliver the form SH09.

When filing your Confirmation statement with Companies House, you are required to update your statement of capital using the CS01 additional information page form.

PLC cancel shares

Public limited company, abbreviated to PLC, must cancel shares that have been forfeited, surrendered or acquired in various circumstances described in section 662 of the Companies Act 2006. This is generally done within three years, in some cases within one year.

Your PLC can reduce its capital by the nominal value of the cancelled shares, unless the shares or your PLC’s interest in them is disposed of in some other way.

Your directors may reduce your PLC’s capital without a special resolution approved by the court. Your directors must deliver the form SH07 with the statement of capital within one month of your PLC cancel shares to Companies House.

If the reduction in capital results in the nominal value of your PLC’s allotted share capital falling below the authorized minimum required of a PLC, your PLC must re-register as a private limited company.

The time limit for re-registration is the same as that for cancellation of the shares.

Reduce share capital

Limited company registered with Companies House in the United Kingdom, generally cannot reduce its share capital unless permitted by statute and confirmed by the court order.

Your limited company can reduce its share capital under the Companies Act 2006 in the following situations:

Reduction following redenomination

Your limited company can reduce its capital following a re-denomination of your share capital under the new procedure in the Act, but this can only be done so as to obtain more suitable nominal values for the re-denominated shares, for example, if the re-denomination results in nominal values that are not whole units of the new currency.

Your company must pass a special resolution within 3 months and within 15 days deliver a copy of that, as well as the form SH15 which includes a statement of capital to Companies House. You must also deliver a director’s statement confirming that the reduction does not exceed 10% of the nominal value of allotted shares immediately following reduction.

Reduction supported by a solvency statement

Your limited company can reduce its capital by special resolution supported by a solvency statement so long as the reduction does not result in only redeemable shares being issued.

You must deliver to Companies House:

  • A copy of your special resolution authorising the capital reduction;
  • A copy of the solvency statement made in accordance with sections 642(1 )(a) and 643 of the Companies Act 2006;
  • A statement of capital;
  • A statement of compliance by your directors;
  • The statutory fee payable for registration of this event by Companies House.

All your company directors must sign the solvency statement.

A statement of compliance by your directors must confirm that your company have made a copy of the solvency statement available to each of the eligible shareholders as required and that your directors did not make the solvency statement more than 15 days before your company’s members passed the resolution. All your directors must sign this statement of compliance.

All of these documents must be delivered to Companies House within 15 days of the resolution being passed. The reduction of capital will not take effect until Companies House has registered a copy of the solvency statement, resolution and statement of capital.

Reduction confirmed by a court order

Your company can reduce its capital by passing a special resolution and obtaining confirmation of the reduction from the court. You must also prepare a statement of capital and get this approved by the court.

You must then deliver the original and a copy of the court order to Companies House, along with the statement of capital and the statutory fee applicable.

In most instances, the reduction will not take effect until Companies House has registered the copy of your court order and the statement of capital.

However, the ‘authorized minimum’ requirement constrains public limited company (PLC). If a capital reduction brings the nominal value of a PLC’s allotted capital below the authorized minimum, it will generally need to re-register as a private limited company.

For this purpose, however, a public limited company can satisfy the authorized minimum requirement by means of shares denominated multiple currencies.

Minutes of meetings

Minutes of meetings for your company’s Annual General Meetings, often referred to as AGM, must be noted and kept with your company registers.

The minutes should record decisions made on various issues discussed during the AGM. The chairman should sign the minutes at the end of the meeting or in the next meeting.

Your shareholders (members) are entitled to see the minutes at the end of the meetings without charge and on payment of a small fee to receive copies.

The minutes should be in a form, whether paper or electronic, that is not vulnerable to changes after the event. It is suggested that they are bound copies rather than loose leaf pages.

Stamp duty on shares

Stamp duty is payable on shares purchase and transfers with value more than £1000. The stamp duty rate is 0.5% of the consideration for your shares. Rounded up to the nearest £5 on each share transfer form to be stamped by HMRC.

Consideration referred to above can be in cash, other stock or shares or debt.

You must send in your stock transfer form together with the stamp duty payable over to HM Revenue and Customs (HMRC) within 30 days.

How to calculate your stamp duty

Example 1 : Your shares consideration exceeds £1000

Mr. Luck bought 100 shares from Good Luck Company Limited for £2350. The stamp duty payable is £2350 x 0.5 per cent = £11.75 and rounded up to the nearest £5, the stamp duty payable is £15.


Example 2: Your shares consideration is less than £1000

No stamp duty is payable if you buy or transfer shares value is less than £1000 and you do not require to send the stock transfer form to HMRC for stamping.

Cancel VAT

You may Cancel VAT registration with HM Revenue and Customs (HMRC) if you have stop trading or providing vatable goods and services to your customers or your sales falls below the de-registration threshold. You must apply to cancel your VAT within 30 days your business become not eligible to avoid a penalty from HMRC.

VAT stands for Value Added Tax.

When working out your taxable sales to determine whether you are eligible to de-register for VAT, the sales amount should exclude VAT. If you are eligible to de-register for VAT, you must submit the Form VAT7 by post to HMRC and giving the reasons for de-registration or do it online.

There are circumstances where your company must cancel your VAT registration. This include:

  1. Where your company no longer selling products or services that subject to VAT.
  2. You have changed original plan and no longer want to sell VAT-taxable products and services.
  3. You are selling your company.
  4. You incorporate your sole trading business to limited company. In this case, you must apply for VAT for your limited company separately.
  5. You no longer belong to a VAT group
  6. You just unite with a VAT group
  7. You are joining the Agricultural Flat Rate Scheme.

Send your completed form VAT7 to HMRC office at the following address:

Grimsby National Registration Service
HM Revenue and Customs
Imperial House
77 Victoria Street
Grimsby
DN31 1DB

For VAT registered businesses based outside UK, the VAT7 form should be sent to:

Non Established Taxable Persons Unit (NETPU)
HM Revenue and Customs
Ruby House
Aberdeen
AB10 1ZP

If HMRC accepts your de-registration application, they will send you a confirmation of de-registration and the final VAT return (Form VAT193) to complete.

If in circumstances where the period covered in the VAT193 will duplicate a previously submitted VAT return (VAT100), you must exclude any VAT on this return that has already been declared on a previous return.

You must complete the final VAT return form even if you have nothing to declare; in this case you just send HMRC a nil return.

The final VAT return (VAT193) should be returned to:

VAT Controller
VAT Central Unit
BX5 5AT

Record shares transfers in Confirmation statement

It is important to complete your Confirmation statement correctly when you have made shares transfers during the year. Companies House will reject your confirmation statement if your shareholders section of your confirmation statement form is incomplete or with errors.

Shares transfers illustration.

There was 100 shares issued to yourself when your limited company was incorporated. You transferred one share to your friend and 49 shares to your wife on 01 January 2019.

The information to be filled in your confirmation statement is presented in the table below.

NameClass of shareNo. of shares heldNo. of shares transfer’dDate of reg.or transfer
MeOrdinary505001.01.2019
WifeOrdinary49
FriendOrdinary1
Total100

The date of transfer of 01 January 2019 to be put next to your name only, do not put the date of the transfer of 1 January 2019 in your wife or your friend name.

Companies House would recognize the transfer date of 01 January 2019 is the date of your wife and your friend received the shares.

Ensure the total number of your limited company’s shares in the column currently held equal to total shares issued by your limited company. Otherwise, Companies House will return your Confirmation statement to your company’s registered office for amendment.

Transfer shares

Transfer shares of your company to a new shareholder or people transfer their company shares to you. Circumstances leads to transfer of shares are:

  • Your limited company become subsidiary or associated company of another company.
  • Agreement between family members.
  • Agreement between business partners

The above applies to private limited company with shares held privately.

To legalise the transfers, the following paperwork must be completed and registered:

Stock transfer form

You require the following information to complete your stock transfer form:

  • Quantity of shares to be transferred such as 1000 shares.
  • Type and class of shares being transferred like Ordinary shares
  • The consideration is the price you paid for the shares, if you paid nothing for it then specify “NIL”.
  • The buyer’s details called the Transferee
  • The seller’s details called the Transferor

Your stock transfer form must be signed by the transferor and transferee. The form must be sent to HMRC for stamping withing 30 days and the Stamp duty to be paid to HM Revenue and Customs if applicable.

New share certificate to be issued to the new shareholder.

Certificate 1

You would require to complete Certificate 1 on the back of the Stock Transfer Form if the price you pay for your shares is £1000 or less. The transfer must not be or part of a series of shares transfers where the total would exceeds £1000.

Certificate 2

Certificate 2 is to be completed if your transfer is exempt from Stamp duty. For examples, the transfer is part of a divorce or civil partnership dissolution. In this situations, your consideration given is not chargeable consideration.

No certificate needed

If you pay nothing for your shares or if you are claiming a relief from Stamp Duty. If you are claiming a relief you will need to send your completed stock transfer form, together with details of the relief you are claiming to HMRC for stamping.

Reliefs exempt from stamp duty

The reliefs available include:

  • Intra-group relief
  • Acquisition relief
  • Reconstruction relief
  • Sales to intermediaries
  • Repurchases and stock lending
  • Transfers to charities

Stamp duty on shares

You would require to pay stamp duty on your shares transfers if the consideration is more than £1000.

You pay stamp duty at the rate of 0.5% of the value of your chargeable consideration, rounded up to the nearest £5 on each shares transfer form to be stamped.

Inform Companies House

You must also inform Companies House of this event by filing relevant Companies House forms and include this information when submitting your confirmation statement.

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