Companies Act 2006 Statement of Capital - Consultation on Financial Information required.
In recognition of the burdensome nature of the new "statement of capital" provision this particular consultation closes on Monday 11 January 2010 - a much shorter timescale than the standard twelve weeks. BIS hopes to effect changes as soon as possible in order to try to address some of the many complaints that have been raised on this issue. It certainly appears to be the topic on everyone?s lips when they call us with questions about annual returns and the like.
Quite soon after its introduction it quickly became apparent that the detail of the requirements for financial information to be provided on the new ?statement of capital? ? a snapshot of a company?s share capital required at various stages and included each year in its annual return ? was a cause for concern for many companies.
There are two main concerns that arise from the new requirements. The key requirement in question here is to indicate on the statement of capital ?the amount paid up and the amount (if any) unpaid on each share (whether on account of the nominal value of the share or by way of premium)?.
For companies with a long and complex share history the requirement to show the share premium per share will be difficult and in some cases unfathomable. The current difficulties for companies that have bought back, cancelled or consolidated shares are not to be underestimated. This issue has been ably highlighted by ICSA.
Secondly, the requirement to provide separate information on shares of the same class issued for different amounts has proved cumbersome to say the least. Those companies must list these separately. This is particularly the case for companies that allot shares frequently, for example in relation to employee share schemes.
Looking through the consultation these appear to be the main issues being addressed. BIS' proposals are:
For class of shares and in total:
To state the number of shares
The amount not paid up on the shares
The total nominal value paid up on the shares
The total nominal value of the shares (whether paid up or not)
As an aggregate figure, the value of the share premium account
"It looks as if this area will change in the near future which is the good news" commented Kathleen O'Reilly, Jordans Head of Internal Legal Services. "That said, we will still have to provide the other information on voting rights for annual returns, and also other prescribed particulars - in relation to dividend/distribution rights on a winding up and redeemable shares. These too have been causing some clients concern".
Jordans will be responding to the consultation based on our own experiences as well as client feedback.
Click here to link to the consultation.
