PLC cancel shares

Public limited company (PLC) must cancel shares that have been forfeited, surrendered or acquired in various circumstances described in Section 662 of the Companies Act 2006. Generally, this is done within three years. In some cases, it is done within one year.

Generally, 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.

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

Share capital below authorised minimum for a PLC

For one thing, 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. Thereafter, 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.

Transfer shares

You can transfer shares of your limited company to others. Generally, transfer of shares take place within a private limited company when:

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

Universally, you must complete a stock transfer form to officialise your transfers. Additionally, you also require to register the transfers with Companies House and also pay stamp duty.

Stock transfer form

Ordinarily, 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.

Accordingly, the transferor and transferee must sign the stock transfer form. Thereafter, you send the form to HMRC within 30 days for stamping. Concurrently, you must pay the Stamp duty to HM Revenue and Customs if applicable.

Consequently you issue new share certificate 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.

Register of debenture holders

Company must keep and maintain a Register of debenture holders when your company issue a debenture. In addition, this register must be made available for inspection at your company’s registered office. If it is not kept there, then inspection would be at your single alternative inspection location (SAIL) address.

Right to inspect the register of debenture holders

Generally, any person can inspect your Register of debenture holders under section 744 of the Companies Act 2006. The person must made the request to your company. Accordingly, the person must provide the following information.

  1. He/she must provide his name and address.
  2. The name and address of the person responsible for making the request if it is on behalf of the organisation.
  3. The purpose for which the information is to be used.
  4. if the information is going to be shared with any other person, then you must provide the following.
    • The person’s name and address
    • The name and address of that individual responsible for receiving the information on behalf, if it is an organisation.
    • How the information will be used and the purpose. For disclosure under S.744 (4) of the Companies Act 2006.

Comply with request

Your company must response to the request within 5 working days. You have the options. You either comply with the request or you apply to court for refusal of compliance. Correspondingly, you must inform the person if you are making a court application.

Secretary duties

The duties of a Company secretary are not specified by law but are usually detailed in the employment contract. Ordinarily, no special qualification is required to hold the secretary position in a private limited company.

However, in a public limited company is compulsory. For this purpose, the secretary must hold certain qualifications as specified in the Companies Act. For instance, you must hold a membership with one of the professional accountancy bodies such as ICEAW or ACCA etc.

Maintain statutory company registers

Generally, the main duties of a company secretary are that of responsible for maintaining the statutory company registers. For instance, ensure statutory filing with Companies House are taken care of at all times.

Submit Confirmation statement

Submit Confirmation statement to Companies House within 14 days. It is a criminal offence for failing to submit your confirmation statement.

Deliver company accounts

Ordinarily, ensure company accounts are filed with Companies House on time. For your information, a private limited company must deliver accounts to Companies House within 9 months after the accounting year end. Whereas for a public limited company, you must submit your accounts within 6 months after their accounting year end. Otherwise, your company will receive a late filing penalty if your accounts are late.

Concurrently, supply copies of company accounts to people entitled to receive them such as company directors, debenture holders, shareholders and every person who is entitled to receive your company accounts.

Notify Companies House of statutory changes

Firstly, send copies of resolutions and agreements to Registrar of Companies.

Secondly, prepare and submit relevant Companies House forms for any changes in appointment or resignation of directors and company secretary.

For example, you must notify Companies House using the form TM02 if your company secretary resigned. On the other hand, you notify Companies House using the form AP03 for a new secretary appointment.

Besides, You must also notify Companies House if your existing company secretary has recently changed their personal particulars. For example, the secretary changed her surname by marriage. In this case, you use the form CH03 to notify Companies House.

Additionally, update registered office address and also register a charge with Companies House and so on.

Thirdly, maintain and update company registers. You can use the standard company registers to help you maintaining your registers. It comes with standard templates. Many people use the standard company registers booklet as reminders what to keep in their company registers.

Administer meetings and prepare minutes

Notify directors, members and auditors of meetings. And also prepare and keep copies of minutes of meetings.

Other secretary duties

Custody and keep safe of company seal, if your company has one.

Lastly, manage the request to inspect your company registers. This aside, you must notify Companies House if your company registers are not kept at your registered office. In this case, use the form AD02.

Register of secretaries

Limited company must keep and maintain Register of secretaries. This is compulsory for company registered with Companies House in the United Kingdom. There is exception for private limited company. The appointment of company secretary is optional.

Concurrently, your company must notify Companies House of your company secretaries. Your company secretaries details would be available on the public register. In other words, anyone can check who is your company secretary using Companies House web check service.

Your company must keep the following details of your secretary

For a person secretary

  • Name and any former name.
  • Address. This may be stated to be your company’s registered office address.

For secretaries that are bodies corporate or firms

  • its corporate or firm name
  • its registered or principal office
  • in the case of an EEA company, where it is registered and its registration number, otherwise, the legal form of the company or firm and the law by which it is governed and, if applicable, where registered and its registration number.

Thereafter, whenever there is a change to in your company secretary details, you must notify Companies House. This includes new appointment and resignation. You must also update your register of secretaries accordingly.

Above all, appointment of company secretary for a public limited company is compulsory. Furthermore, the person to hold position must meet the required qualifications and experience set by law.

For example, the secretary must be a member of one of the professional accountancy bodies such as the ACCA or ICEAW. This is because the legal administration for a PLC is more complex than a private limited company. Especially the statutory filings with Companies House and complying with the rules of the Financial Conduct Authority.

However, there is no special requirement for appointment of company secretary for a private limited company. Any individual can be your company secretary if you prefer to have one.

Petty cash

Petty cash in hands for day-to-day small expenses such as office stationery, cleaning stuff, materials, staff taxi fares reimbursement and so on.

It is essential to maintain a petty cash account to account for the cash withdrawn from your company bank account for use as petty cash and expenses paid out of your petty cash.

Regular reconciliation of your petty cash is recommended to ensure your cash receipts and expenses are tied up.

There are number of ways to record your petty cash transactions.

Expense voucher

You could issue a petty cash voucher each time you pay out of your petty cash and asked the person claimed the monies to signed your voucher. Staple the purchase receipt or the invoice with your petty cash voucher and file them away. Once a month, you could sum these up and put them in your purchases record.

Petty cash book

Another approach is to write down the petty cash expenses as they occur in a petty cash book. You may be able to obtain a stationery specially designed for petty cash accounting from any stationery shops. The petty cash book comes with a standard columns and rows for easy recording of your petty cash transactions. All you need to do is to fill in the columns.

Use excel to summarize petty cash transactions

A further alternative is to use the excel spreadsheet to create your own petty cash summary form to record your petty cash transactions and staple the receipts and invoices to the summary. Ideally ask the person you reimburse the money to sign on your petty cash summary to acknowledged receipt of the cash.

This measure is used to prevent misappropriation and avoid expenses being claimed twice.

Whichever methods you use to record petty cash transactions, you need to record the date the cash was spent, how much it was and what it was for. Similarly for cash received for petty cash, the date receipt and from whom or which bank account.

Your petty cash balance would be included in your company account under cash and bank balances in the balance sheet.

UK Accounting standards

The UK company law requires limited company accounts to be presented in a prescribed format and according to UK accounting standards.

Generally, the UK accounting standards apply to companies registered with Companies House in the United Kingdom.

These accounting standards are known as Statements of Standard Accounting Practice (SSAP) for accounting standards issued prior to September 1990. Thereafter, they are known as Financial Reporting Standards (FRS).

List of accounting standards

RefAccounting standard for
SSAP 4The accounting treatment of government grants
SSAP 5Accounting for value added tax
SSAP 9Stock and long term contracts
SSAP 13Accounting for research and development
SSAP 17Accounting for post-balance sheet events
SSAP 19Accounting for investment properties
SSAP 20Foreign currency translation
SSAP 21Accounting for leases and hire purchase contracts
SSAP 24Accounting for pension costs
SSAP 25Segmental reporting
FRSSEFinancial Reporting Standard for Smaller Entities (Jan 2015) no longer applicable.
FRS 1Cash flow statements
FRS 2Accounting tor subsidiary undertakings
FRS 3Reporting financial performance
FRS 4Capital instruments
FRS 5Reporting the substance of transactions
FRS 6Acquisitions and mergers
FRS 7Fair values in acquisition accounting
FRS 8Related party disclosures
FRS 9Associates and joint ventures.
FRS 10Goodwill and intangible assets.
FRS 11Impairment of fixed assets and goodwill.
FRS 12Provisions, contingent liabilities and contingent assets.
FRS 13Derivatives and other financial instruments: disclosures.
FRS 14Earnings per share.
FRS 15Tangible fixed assets.
FRS 16Current tax.
FRS 17Retirement benefits.
FRS 18Accounting policies.
FRS 19Deferred tax.
FRS 20 (IFRS 2)Share-Cased payment.
FRS 21 (IAS 10)Events after the balance sheet date.
FRS 22 (IAS 33)Earnings per share.
FRS 23 (IAS 21)The effects of changes in foreign exchange rates.
FRS 24 (IAS 29)Financial reporting in hyperinflationary economies.
FRS 25 (IAS 32)Financial Instruments: Disclosure and Presentation.
FRS 26 (IAS 39)Financial Instruments: Measurements.
FRS 27Life Insurance.
FRS 28Corresponding Amounts.
FRS 29Financial Instruments : Disclosures.
FRS 30Heritage Assets.

UK accounting standards effective on or after 1 January 2015

FRS 100 Application of Financial Reporting Requirements.
FRS 101 Reduced Disclosure Framework
FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland.
FRS 103 Insurance Contracts.
FRS 104 Interim Financial Reporting.
FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime.

Bookkeeping using excel spreadsheet

You may use Microsoft excel spreadsheet to do your company bookkeeping when just starting out your business. The excel spreadsheet is suitable for businesses with low volume of business transactions.

Consider migrate to more well known bookkeeping software when your business volumes increasing higher and you foresee it would be more convenient to use reputable bookkeeping software for your business.

With excel spreadsheet you can design your own templates and create format for your bookkeeping reports. It is very flexible in terms of adding columns or deleting rows and simple arithmetic formulas can be incorporated into specific cell in the spreadsheet for quick calculation.

The benefit of using excel spreadsheet for bookkeeping is that you do not have to pay bookkeeping software subscriptions fee and also your accountant will charge less fee because you are providing them with an organised bookkeeping data.

However, excel spreadsheet does not have automatic updates on latest changes to corporation tax rates and VAT rates and it also does not have online filing facility to submit your VAT returns, company accounts and corporation tax return.

You do not require online facility if your accountant is taking care of all these filings for you. All you require to do is to give your excel file to your accountant and he/she will put it into a statutory format in compliant with the UK filings requirements.

If you would like some help to design an excel spreadsheet templates to record your company transactions. You are welcome to contact our accountants and they will be help you.

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