Companies Act 2006 - Statements of Capital

From 1 October 2009 companies are now required to file a statement of capital with the Registrar of Companies at various stages of its corporate life - on formation, with the annual return and following an alteration of share capital.

An alteration of share capital includes:

an allotment of shares;
subdivision or consolidation of shares;
reconversion of shares into stock;
redenomination of shares;
reduction of capital;
redemption of shares;
purchase of own shares; and
a cancellation of treasury shares.

What information is required?

The requirements for a statement of capital vary slightly depending on whether the statement of capital is required as part of the annual return or whether it derives from an alteration of share capital, but typically the information required is:

the total number of shares of the company;
the aggregate nominal value of those shares;
for each class of shares:
- prescribed particulars of the rights attached to those shares;
- the total number of shares of that class;
- the aggregate nominal value of the shares of that class; and
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).

The annual return form contains a statement of capital but all other statements of capital must be filed using the relevant “SH” form published by Companies House. Click here to view list of forms.

A couple of observations

Rather onerously, it is necessary to include the rights attached to each class of share unless the statement of capital forms part of the company’s annual return. In particular a company must include any voting rights, any rights to participate in a distribution of dividend and/or capital (including on a winding up) and whether the shares are redeemable in which case the terms and conditions of redemption must also be included.
An issue has arisen in relation to the requirement to disclose the amount paid up on each share, including any premium paid. This is particularly onerous for companies which have issued a large number of shares over a long period of time and at different paid up values – triggering a need for a separate disclosure for each share issued at a different value – or where the shares have been the subject of buy backs or redemption (or indeed some other share related corporate action).
Note that by leaving any part of the form blank will trigger an automatic rejection from Companies House.
Companies House have confirmed that all particulars need to be included in the form and it is not sufficient to cross refer to particulars contained in a company’s articles of association.

For these reasons it may be difficult or impossible for some companies to provide the required information.

The Department of Business, Innovation and Skills (BIS) has conducted a consultation on these issues amongst practitioners. We understand that, subject to the final outcome of the consultation, BIS intend to amend the current requirements to ensure that only useful and relatively easily available information is required when completing the relevant forms. This is likely to mean that the information is provided on an aggregate basis for each class of shares rather than a per share basis. The consultation period has now ended so we are hoping that these changes will be made in the next few months.

In the meantime companies are asked to do what they can to provide numbers in their statements of capital that provide a pragmatic allocation of their share premium reserve between shares or classes of shares.

ICSA has provided some recent guidance which suggests that until the BIS provide a solution, companies which are not able to provide accurate information on a per share basis could divide the aggregate amount of share premium account by the number of shares in issue at the date of the statement.

Should you require any assistance in completing the statement of capital for the first time, please do not hesitate to contact us.

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.

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