Share capital – issue or allot new shares (including authority to issue & pre-emption)
Can I use Kudocs to issue new shares?. Yes. You can use Kudocs to perform the entire share issue if you want (including steps like obtaining authority to issue, disapplying or running a pre-emption process, subscription agreement, deed of adherence, and then doing all the legwork to implement the share issue – share certs, SH01, register updates, etc).
Alternatively you can complete those legal processes off line, and still use Kudocs to do the legwork of implementing the share issue (share certificate, register updates, SHo1, etc).
Find out how to do this, here.
What is the difference between issue and allot? Not much. There is a (relatively) subtle legal distinction between the two, but Kudocs refers to share issues for ease of reference.
Can I issue shares that have been paid for in a currency that is different to the nominal value? Using Kudocs to perform or record a share issue, you can only issue those shares with a price/share that is in the same currency as the nominal value (e.g. £0.01 Ordinary shares can only be paid for in £). There are 2 reasons for this:
(1) The amount paid for shares is a financial/ accounting matter – what money the company actually receives – it is not a legal matter (which is what is shown in the registers). Therefore our understanding is that best practice is to record the price paid in the same currency as the nominal value.
(2) The SH01 that Kudocs submits to Companies House does not allow for a payment currency different to a nominal currency (this is different to a paper SH01). Therefore there is no way for Kudocs to submit (if selected) an SH01 with 2 currencies.
While you should therefore enter the price paid in the nominal currency using the spot conversion rate as at the relevant time, you can still use Kudocs to record this information, but you will have to add the extra information (e.g. that the valuation was done in a different currency, the shares were paid for in a different currency, etc.) as notes to the transaction.
Can I issue shares using Kudocs where there has been non-cash consideration? Yes. You will be able to add details of the non-cash consideration when you enter the details of the transaction.
Please note that non-cash consideration does not mean that shares are issued without a price or for zero. Shares always have to be issued at a price greater than zero (not least, because shares have to be issued for more than their nominal value). Non-cash consideration just means that the payment method for those shares is something other than cash.
e.g. John does £50,000 worth of work for a company. Instead of being paid for that work, the company issues 25,000 shares to John. Therefore the price per share is £2 (£50,000 / 25,000), and the non-cash consideration is the work John has done.
Can I use Kudocs to obtain shareholder authority to issue new shares?. Yes. This is built in to the share issue process in Kudocs. You can select whether you need to obtain it, or not. And if you do, whether you want to use Kudocs to do so (via an ordinary resolution), or want to handle it outside of Kudocs.
What is pre-emption and what do I do about it? Pre-emption grants existing shareholders the right to new shares or other equity in proportion to their current shareholding. It is a way for shareholders to prevent being diluted (reduce their % holding) when new shares are issued. These rights are defined by the Companies Act 2006, in the company’s articles of association or in a shareholder agreement. Shareholders must either be offered the chance to buy the new shares/ equity, or agree to waive (also known as ‘disapply’) their rights for a specific share or other equity issue.
Can I run a pre-emption process using Kudocs? Yes. This is built in to the share issue process in Kudocs, or can be completed as a standalone process. You can select whether you want to run a pre-emption process, or disapply it, or handle it all outside of Kudocs. For more information see here.
If you choose to run pre-emption in Kudocs, the tool is pretty sophisticated: it will calculate the pre-emption entitlements (including rounding adjustments to ensure all current shareholders are offer a whole number of shares), send shareholders a pre-emption application (which they can reject + deed of waiver, take up in part, in full or oversubscribe. Their responses are saved in the system, pre-populating their allocations when you come to issue the shares. It is all done online, making it very easy for you to initiate and track, and for existing shareholders to participate.
Can I disapply pre-emption using Kudocs? Yes. This is built in to the share issue process in Kudocs, or can be completed as a standalone process. You can select whether you want to disapply pre-emption using Kudocs (via a special resolution) or handle it all outside of Kudocs.
Can I deal with authority to issue and pre-emption without having to issue shares?. Yes. Kudocs has a ‘standalone’ process that allows companies to obtain the necessary permissions from investors without then issuing shares. This is useful/ necessary when shareholder permission is required before granting rights to other forms of equity.
Will Kudocs update Companies House after a share issue? Yes: if you select the option, Kudocs will file an SHo1 for you automatically at Companies House via the API at the end of the share issue process. You don’t have to do anything!
Alternatively, you can use Kudocs to file a standalone SH01 once the share transaction is complete. This is useful when completing multiple share issues on the same day or over a period of a few days and you want to file only one SH01.
Will Companies House know the details of the investors/ investments if this filing is made? No. The filing only contains high level information about the shares issued and the amount paid. It does not disclose who bought the shares or how many they bought. The only information that Companies House has about shareholders and shareholdings is in the confirmation statement, which has to be filed at least once a year (you can file it more often if you want). It contains a complete list of all shareholders and shareholdings. From that it is possible to work out some details about investors and investments.
Will Kudocs generate share certificates for me? Yes, if you ask the system to do so. You can generate wet or electronically signed certificates (Kudocs will manage the signature process for you) and you can use Kudocs to distribute the signed certificates to all shareholders once signed. Kudocs will even automatically cancel any preceding share certificates to prevent duplication.
Can I use Kudocs to generate EIS or SEIS certificates for investors? Yes, once the shares have been issued, just click on the EIS/SEIS button and follow the very easy instruction. For more info see here:
Generate EIS/SEIS Certificates (individual direct investors)
Generate EIS/SEIS Certificates (investors behind corporate nominee)