The UK’s Small Business, Enterprise and Employment Act 2015 received Royal Assent on 26 March 2015, and makes important changes to the law applying to UK companies. Among other things, the new law is designed to address the government’s key “Transparency and Trust” proposals, aimed at deterring illegal activity such as money-laundering and tax evasion.
One of the most significant changes is the abolition of the bearer shares. Section 26 and Schedule 4 of the 2015 Act stated that the abolition of the bearer shares and it will take effect from 26th May 2015.
Although at present, it is still possible for a company to issue bearer shares before 26th May 2015. But the issue of new bearer shares will be prohibited after the enforcement of the legislation, and holders of existing bearer shares will have nine months grace period to surrender the shares to the company for conversion into registered shares such as ordinary shares.
The provisions of the Act also requires all companies with bearer share class must give notice to the holders of bearer shares of their conversion rights within one month of these provisions entering into force, and again before the final month of the nine months grace period
The notice must be made available on the company’s website (if any) and published in the Gazette. If any bearer shares are not surrendered for conversion before the end of the grace period (by 25th February 2016) the company will be required to apply to court to cancel the bearer shares or to pay the nominal share value to the court.
Companies which make provision for bearer shares in their articles will be able to remove these provisions without the shareholders passing a special resolution. A copy of the amended articles would have to be filed at Companies House.
The key dates and time frame:
There is nine months grace period from the 26 May 2015 to surrender and convert the shares.
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