UK Director of Corporate Secretarial Services, Susan Fadil outlines the phasing out process for bearer shares under the Small Business, Enterprise and Employment Act 2015 (SBEEA 2015) and the affected company compliance obligations.
What is happening?
Bearer shares are being abolished.
When?
New bearer shares can no longer be issued as of 26 May 2015.
The period of surrendering bearer shares ends. All bearer shares in issue after this date will be cancelled as of 26 February 2016.
Who does this affect?
The holders of bearer shares will need to look out for notices inviting them to surrender their bearer shares. If the shares are not surrendered they will be cancelled.
Companies which have issued bearer shares will need to call for their surrender. This notice must be given within the first month of the surrender period (so by 26 June 2015), and again before the end of month eight (26 January 2016) if there are bearer shares remaining at that point. Failure to give notice will constitute an offence by the company's officers. For more detail please see below.
Companies whose articles permit the issue of bearer shares: may alter their articles to remove the relevant provision without the need for a special resolution (an ordinary resolution will suffice).
Timetable
| 26 May 2015
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Commencement Date |
| By 26 June 2015
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First Notice of surrender issued by:
- Publication in the Gazette
- Communicated to each bearer shareholder in the same way (if any) as the company normally communicates with that shareholder for purposes relating to the bearer shares
- Made available in a prominent position on the company's website (if it has one) for a specified period
The notice must specify:
The bearer's right of surrender.
The consequences of failing to exercise the right of surrender during the first seven months of the Voluntary Surrender Period.
The fact that the right of surrender will cease to be exercisable on the expiry of the Voluntary Surrender Period.
The consequences of the bearer's failure to surrender his/her warrants during the Voluntary Surrender period.
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Pre 26 December 2015 (the Voluntary Surrender Period)
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If a holder surrenders the bearer shares during the Voluntary Surrender Period the Company must, within two months of the surrender, have certificates for the shares ready for delivery. The holder’s details will be entered in the register of members. |
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26 December 2015
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Any Bearer Shares not surrendered are disenfranchised.
Any transfer of, or agreement to transfer the shares is void.
All rights attached to the shares are suspended (including voting and dividend rights).
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By 26 January 2016
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The Second Notice is issued in the same way as before to the holders of any remaining bearer shares.
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26 February 2016
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The surrender period ends.
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By 26 May 2016
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The Company must apply to Court for an order cancelling any remaining Bearer Shares and provide notice that it has done so to the holders of such remaining bearer shares.
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If the Court is satisfied that the Company has complied with its obligations under the SBEEA 2015 it must make an order for cancellation.
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If the Court is not so satisfied then it must make a suspended cancellation order which provides for a further two month grace period to enable the holder of the shares to surrender them.
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The Company must enter the cancellation date (being the date on which the order takes effect) in its register of members
Within fourteen days of the cancellation date, the company must pay into court an amount equal to the nominal value of the cancelled shares and the whole of any premium paid on them, together with any dividends or other distributions (and accrued interest) due in respect of the bearer shares while the rights attached to them were suspended pending cancellation
The company must notify the resulting reduction of capital to the Registrar of Companies within fifteen days of the cancellation date by delivering to it:
- a copy of the order
- in the case of a suspended cancellation order, a statement confirming that the order has taken effect from the cancellation date; and
- a statement of capital
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Get in touch with the UK Corporate Secretarial team with any questions or if you require specific advice.
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