Company Ownership - Memorandum & Articles

Hello

Looking for some guidance from the practising accountants / Company secretaries on the board or anyone else knowledgeable.

We have recently set up a Ltd company with two shareholders names appearing on the memorandum & articles. As yet, no share capital has been paid up by either shareholder. The company has not yet started trading.

It now transpires that one of the shareholders listed will not proceed and will replaced by a different shareholder.

Where should this change be registered and how.Do the memos and articles need to be amended ? Does the CRO need to be informed ?

Many thanks for your help.

You can transfer the share from the original shareholder/founder to the new one. Really, both of the original shareholders should pay up the capital on the two shares and then the share gets transferred for that value to the new shareholder. You don't need to register a transfer with the CRO but you do need to execute a share transfer form, record the transfer in the register and file the shareholding with the CRO as part of your normal B1 return. I think that going about this by changing your memo and arts is by far the most cumbersome way of doing it (and am not sure if it's even feasible to change the original names on the M&A at all)

Sprite

Excellent, Much appreciated

We are working on the assumption that the company has not traded and all there shold be in the company at present is the subscriber shares?

Yes the correct way is to get the original subscriber to pay up, then do a share transfer. This could be implemented on the same day or the next day after the company was set up. The share transfer form will need to be stamped by Revenue and you should record the changes in your Share Register.

In respect of the Memorandum and Articles, no matter how many times your shareholding changes, the original subscriber pages for the Memorandum & Articles remains the same, so there is no requirement to file anything with CRO on this. Even if the shares change hands many times, each time you lodge a change on your Memorandum and Articles with the CRO you will be lodging copies of the original (signed pages) with each document.

CRO are getting quite picky on this and pulled me up on one recently where my original pages were just printed with no photocopied signatures. Company was established in 1972 and original subscribers now deceased!

Also, just a reminder if the person not proceeding was a director as well as shareholder, you will need to file a B10 with CRO.

Do you still have to get the transfer stamped with Revenue these days? I thought that requirement was done away with...

Sprite

Both of your replies are logical enough but not the solution I was hoping for.

Is it really logical that a person who was walking away from the company would still have to purchase the shares and then sell them again. I'm trying to avoid this as it infringes the shareholders agreement which otherwise is not relevant to this matter.

For example if the departing shareholder refused to buy and sell the shares or died before he could do so, what would the position be.

Thanks for bearing with me...................

No, stamp duty is still payable at 1% on the transfer of shares. Importer needs to send a share transfer form with an SD4 to the stamping branch at Dublin Castle.

It was Companies Capital Duty at 0.5% that was abolished in December 2005.

Thanks MandaC

OP, if the company is formed, then that's it done. If the shareholder doesn't pay the required amount on the share, I'm sure there are all sorts of procedures that you can follow to not register the issue of the share (see your Arts for that process). In that case the share will never have been fully paid up. Then you'd (according to your Articles) issue a new share to the willing second shareholder, file a B5 with the CRO. What I don't know (and MandaC probably will) is whether you can even get to this second step when one of the subscribers has not paid up on the share.

It's the two original shareholders that are definitely mentioned as subscribers, yes? Often, with company formation companies, there will be two completely different names as subscribers (on companies that are ready to go) and you'll just transfer those shares to the people who want to "set up" the company. If this is the case, it may be an easier process insofar as you can just transfer that second share to the person willing to be a shareholder.

Not sure why the original shareholder would have a problem with the original solution proposed - is the share price very high? Are they not contactable? I wanted to give you the simplest solution to your query and, to my mind, trying to find out how to change the original subscribers is not the simplest way by a long margin.

Sprite