Important news for many of those organisations using London Registrars’ business consulting service is the abolition, as of 26 May 2015, of bearer shares, which are shares that have been issued but have no registered owner. The change has been brought into law by the Small Business, Enterprise and Employment Act 2015 (SBEE)’s implementing of amendments to the Companies Act 2006.
It is now no longer possible to issue new bearer shares, with SBEE applying a prescribed procedure by which existing bearer shares must be converted or surrendered within a fairly short time period – the first notice must be sent by 26 June. If a bearer share is not surrendered by 26 December 2015, it will no longer be transferrable, any purported transfer being void. Nor will it have any rights attached to it, including voting rights and rights to a dividend/distribution.
In consequence any distribution that the bearer share would have otherwise received must be paid into a separate bank account. If a company still has bearer shares by 26 February 2016, it will be required to cancel them via a court application. Within 14 days of the shares being cancelled, it will be necessary for the company to pay into court an amount equal to the nominal value of the shares and any suspended distributions.
Clients using the London Registrars business consulting service who have issued bearer shares are advised to immediately check their records to determine who is the holder of such shares. These individuals will then need to be contacted. It is an offence for a company to fail to follow the prescribed procedure for dealing with bearer shares.
If an acquisition is proposed, the acquirer’s due diligence should closely review the share history of the target company to identify any outstanding bearer shares. It will not be possible for a company to be struck off if it has outstanding bearer shares.