INTRODUCTION
This case deals with Company Law and more specifically with share capital in relation to allotment of shares and transfer of shares. With reference to the Companies Act 2006 and appropriate case law it is hoped that a reasoned conclusion is reached for the issues put forward by Verity.
ALLOTMENT OF SHARES
The general provisions for the allotment of shares are found in sections 549 to 551 of the Companies Act 2006 and there are different provisions depending on what type of company is involved. The directors of a public limited company cannot exercise their powers to allot shares in the company under section 549, Companies Act 2006 ; however, the directors of a private limited company can exercise their powers to allot shares only if the company is dealing with one class of shares. In section 551 of the Companies Act 2006, it states that the company must have authorisation by way of a provision stated in the company’s articles or by way of an ordinary resolution if provisions are unavailable in the articles. Within the terms of the authorisation it must state the maximum amount of shares to be allotted and the duration of the allotment which cannot be more than five years. If the company fails to obtain this approval the directors involved who “knowingly contravenes, or permits or authorises a contravention” of this authorisation, under section 549 of the Companies Act 2006, he, she or they commits an offence. If he, she or they are found to be guilty, liability falls to her, him or them personally but does not invalidate the allotment. In this particular case, focus is on section 550, Companies Act 2006 as we are dealing with a private limited company which only has ordinary shares. Before any shares have been i...
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...ing shareholders do not wish to purchase any of them. Additionally, the transfer is also legal on the basis that the proper procedures are taken to proceed with the transfer.
CITATIONS
Dodds v Cosmopolitan Insurance Co [1915] SC 992 (IH)
Hackney Pavilion Ltd [1924] 1 Ch 276, Re
McLintock v Campbell [1916] SC 966 (IN)
Rayfield v Hands [1960] Ch 1
Zinotty Properties Ltd [1984] 3 All ER 754, Re
BIBLIOGRAPHY
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Ervine, C. (2013), Core Statutes on Company Law, (13-14 edn), Palgrave MacMillan
Hicks A. and Goo, S.H. (2008), Cases and Material on Company Law, (6th edn), New York, Oxford University Press
Pillians, B and Bourne, N. (2012), Scottish Company Law 2/e, Routledge
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R v Secretary of State for Transport, ex parte Factortame Ltd and others [1999] All ER (D) 1173.
Andrews N, Strangers to Justice No Longer: The Reversal of the Privity Rule under the Contracts (Rights of Third Parties) Act 1999 (2001) 60 The Cambridge Law Journal 353
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Ian Smith and Aaron Bake, Smith and Wood’s Employment Law (10th edn Oxford University Press, Oxford 2010) 80
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Martin, J and Gibbins, M . (2010) AZ Handbook Law . 4 ed . Oxfordshire: Philip Allan Updates.
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