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model articles

model articles

Postby jantra » Wed Jan 04, 2017 11:23 am

if a company uses the model articles does it need to amend the articles if it wants to issue a new class of share? for example, if a company has 100 ordinary shares with equal div/voting rights attached, does it need to amend the articles if it wishes to change this to 100 ordinary A and 100 ordinary B so that the shareholders can hold equal voting but different dividend rights?

s22 of the model articles states that the company has the power to issue new shares, but doesn't state whether the articles need to be amended....

what am i missing?
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Re: model articles

Postby atticus » Wed Jan 04, 2017 12:04 pm

Article 22 (current version) permits the issue and allotment of different classes of shares. No amendment is therefore required.
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Re: model articles

Postby jantra » Wed Jan 04, 2017 12:09 pm

thanks
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Re: model articles

Postby dls » Wed Jan 04, 2017 12:13 pm

I would only add my caution that such arrangements can be useful, but usually only succeed in creating a situation of confusion.

If there are problems within a company needing such arrangements, then those problems need resolution. Different share classes can sometimes merely embed the problem.
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Re: model articles

Postby atticus » Wed Jan 04, 2017 1:57 pm

There is often a good reason, examples being:

- shareholders who wish to control timing of dividends for personal tax purpose.

- allowing for some shareholders to receive additional dividends as remuneration for working in the company where other shareholders do not.
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Re: model articles

Postby jantra » Wed Jan 04, 2017 9:47 pm

As atticus says, you may want an equal say but a difference in share of profits.
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Re: model articles

Postby jantra » Sun Jan 08, 2017 12:25 pm

One other related question...

The business consists of 2 directors who are the only shareholders. The SHA has documented the voting and dividend rights according to the class of shares held. Would the new issue of shares need to be passed by ordinary resolution or would the signed SHA suffice?
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Re: model articles

Postby atticus » Sun Jan 08, 2017 2:08 pm

I have not seen the shareholders agreement, so am unable to say.
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Re: model articles

Postby jantra » Sun Jan 08, 2017 5:09 pm

Fair enough. What sort of provisions would be required in the SHA to negate the need for an ordinary resolution?

Shares in issue/subscribed/allotted and to whom?
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Re: model articles

Postby atticus » Sun Jan 08, 2017 5:17 pm

This company has adopted the model articles - or have I misunderstood? If so, the directors may issue and allot shares.
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