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Company Law Bill [HL]

Where a company decides to redenominate its share capital under Clause 578, it must have regard to Clause 579, which sets out how the new nominal value of the share that has been redenominated from one currency to another should be calculated. Amendment No. A89A would insert additional words into Clause 579, presumably to clarify that where a company redenominates all or any class of its share capital under Clause 578, the nominal value of each of the shares in the company in any class should be calculated in accordance with the procedure described in Clause 579. It is already clear from Clause 578 that a company may redenominate all or any part of its share capital and that, from the wording of Clause 579, where a company has redenominated any class of its share capital, the procedure set out in Clause 579 is to apply to each share of that class. In short, the proposed amendment amounts to a drafting suggestion—I think that that has been confirmed—that we are not minded to accept for the reasons I have outlined. Amendment No. A89B seeks to make clear that, for the purposes of aggregating the current nominal values of the shares that are to be redenominated in accordance with step one of the procedure prescribed in Clause 579, the company should include unissued as well as issued shares in that class. While I understand the intention behind this amendment, the difficulty with this proposition is that for companies formed under the Bill there will be no such thing as unissued share capital. In particular, the memorandum of a company formed under the Bill will no longer contain a ceiling on the number of shares that a company is authorised to allot. Consequently, all the company’s share capital will comprise issued shares. In the circumstances, the Government do not think that it would be appropriate to incorporate a reference to ““unissued shares”” or ““unissued share capital”” into the body of this clause or elsewhere in the Bill, as this may cause confusion in the future. That leaves the question of what provision, if any, needs to be made for existing companies which have authorised but unissued share capital and which want to redenominate their entire capital under the scheme provided in the Bill. We are aware that this is an issue, and that we will need carefully to consider this point in the context of the transitional arrangements that need to be made for existing companies.