Redeem shares

Redeem shares

Redeem shares is allowed if your company have issued redeemable shares with the agreement that your company will buy them back at the option of your company or your shareholder after a certain period of time.

You can only redeem paid up redeemable shares.

Your company directors may, if authorized either by your company’s articles or by a resolution, set the terms of your shares redemption.

The terms of redemption of shares must be stated in your company’s articles.

Your company must submit the Companies House form SH02 together with a statement of capital to the Registrar of Companies within a month of your redemption.

The form SH02 can also be used to give notice of consolidation, sub-division and re-conversion of stock into shares.

The changes in your shares capital as a result of your shares redemption must be included in your confirmation statement.

Company buy back own shares

Company buy back own shares

Company could buy back your own shares. Your company can finance your purchase or redemption of your own shares out of your capital by passing a special resolution. Your company can only do this provided there is no restriction or prohibition in your company’s articles of association.

Solvency statement

If your company finances your purchase by a payment out of its capital, your company directors must also make a statement about the solvency of your company immediately after the purchase and in the following year. All your company directors must sign the solvency statement.

Directors’ report and auditor’s report

Your company must make a copy of your solvency statement and your auditor’s report confirming your directors’ opinion and made available to your shareholders (members) at or before in the case of a written resolution. If your resolution is to be passed at a meeting, by making a copy of your directors’ statement and your auditor’s report available for inspection at that meeting.

Your company must also deliver a copy of your directors’ statement and your auditors report to Companies House no later than the day on which your company first publish or give notice of your proposed payment out of capital.

You may refer to the section 719 of the Companies Act 2006 for the requirements for publishing and giving notice on this matter.

Apply to court to cancel

Any shareholder of your company who did not consent or vote in favour of your resolution or any creditor of your company, can apply to court to cancel your resolution, within five weeks of the passing of your resolution.

The applicant to the court must complete and the Companies House form SH16 to be delivered to Companies House immediately. When your company receives notice of your court application, your company must immediately notify Companies House using the form SH17 and, within 15 days of the making of a court order, your company must deliver a copy of the order to Companies House.

Refer to Parts 17 and 18 of the Companies Act 2006 for further information on company shares administration required by law.

The changes in your company’s shares capital are to be included when filing your Confirmation Statement.

Redenomination of share capital

Redenomination of share capital

Redenomination of share capital is allowed under Companies Act 2006. Your company limited by shares is allowed to redenominate your share capital or any class of your share capital into other currencies by passing a resolution.

Check the Articles of Association of your company for any clause relating to prohibition or restriction on redenomination of shares before your start your redenomination of share capital process with Companies House.

Your company must use an appropriate spot rate of exchange used for the redenomination. This must either be a rate prevailing on a particular day specified in the resolution or the average rate taken from each consecutive day of a period specified in the resolution. Bear in mind that the day or period chosen must be within 28 days ending on the day before the resolution is passed.

You shall follow a three step route, for each class of shares to calculate the new nominal value of each share in the class:

  • Take the aggregate total of the old nominal value of all the shares of that class
  • Translate that amount into the new currency at the rate of the exchange specified in the resolution.
  • Divide that amount by the number of shares in the class.

You must within one month of your redenomination taking effect to deliver the Companies House form SH14 together with a copy of the resolution to Companies House. A statement of capital is to be completed as part of this form as well.

Purchase of own shares

Purchase of own shares

Your company may purchase of its own shares if there is no restriction or prohibition in the articles of association. Your shareholders must approve it.

However, your company is not allowed to purchase of its own shares if this would leave only redeemable shares in issue.

You must notify Companies House when your company purchase of its own shares. Complete the form SH03 and send it to Companies House. The form SH03 is used for two purpose, shares purchased for cancellation and shares purchased into treasury.

For Private and Public company

When your company submit the form SH03 to notify Companies House a purchases its own shares event, your shares will be cancelled on their return. If your company is cancelling the shares immediately, the form SH06 which includes a statement of capital must also be delivered to Companies House.

For Public limited Company

However, if your company is a public limited company with qualifying share, your company may either cancel those shares immediately or hold them in treasury for resale or transfer to an employees’ shares scheme at a later date or cancel them at a later date.

Your company must notify the initial purchase of treasury shares with Companies House and if your company is cancelling those treasury shares immediately you must complete the form SH06 and send it to Companies House.

If your company sell or transfer the shares from treasury, your company must deliver the form SH04 and if your company subsequently cancels the shares, the form SH05 which includes a statement of capital must be registered with Companies House.

Stamp Duty on purchase of own shares

Purchase of your company’s own shares are subject to stamp duty if the consideration for your shares is above £1000, HM Revenue & Customs (HMRC) must stamp the form SH03 before it is to be delivered to Companies House, if the consideration is £1000 or less, your company need not send your form to HM Revenue and Customs to be stamped, but your company must sign and declare that fact on your form.

You may use a single form SH03 to notify Companies House of purchase of shares on different dates and under different contracts.

See accountants advice if you are not familiar with administration for purchase of own shares with Companies House.

Register of interests in PLC shares

Register of interests in PLC shares

Register of interests is part of your company statutory registers that must be kept and maintained according to the Companies Act 2006. Part 22 of Companies Act 2006 gives power to a PLC to investigate who has an interest in its issued share capital.

Your company must record the following information when received the notice imposed under section 793 of the Companies Act 2006 in your Register of Interests within three days.

  1. The fact that the requirement was imposed and
  2. The date on which it was imposed, and
  3. The information received in pursuance of the requirement.

The information must be entered:

  • Against the name of the present holder of the shares in question,
  • If there is no present holder or the present holder is not known, against the name of the person holding the interest.

Your register must be made up so that the entries against the names entered in it appear in chronological order.

Place of inspection

If your Register of interests is not kept at your company’s registered office address. You must inform Companies House of your Single Alternative Inspection Location (SAIL) address, the address where of Register of interests is kept and made available for inspection.

You must inform Companies House if there is any changes to your registered office address or your SAIL address.

Fail to comply

The imprisonment and fines for failing to comply with request for and disclosure of information of your Register of interests under Section 814(3) of the Companies Act 2006 are:

Imprisonment Terms

On conviction on indictment, to imprisonment for a term not exceeding two years or a fine or both.

On summary conviction, the prison term and fine are outlined below.

CountryPrison termThe standard scale finesIf guilty
England and WalesA term not exceeding 12 monthsA fine not more than the statutory maximumEither or both
ScotlandA term not exceeding 6 monthsA fine not more than the statutory maximum
Either or both
Northern IrelandA term not exceeding 6 months A fine not more than the statutory maximum
Either or both

Your company will also be fined if you refused the inspection request made to your company with no good reasons. You also must not remove any entries in your Register of interests as and when you feel like it. It is illegal and you will be fined too for this.

Shares allotment

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

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. 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 the cancellation 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

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.

Stamp duty on shares

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.

Record shares transfers in Confirmation statement

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.

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