how to fill in companies house form 88(2)?
Discussion
http://ws5.companieshouse.gov.uk/forms/882.pdf
does anyone know what info to put in the boxes (3 columns) with the these titles next to them: "Class of shares", "Number alloted", "Nominal value of each" and "Amount (if any)". Why are there 3 boxes for each heading?
does anyone know what info to put in the boxes (3 columns) with the these titles next to them: "Class of shares", "Number alloted", "Nominal value of each" and "Amount (if any)". Why are there 3 boxes for each heading?
OK. You are allowed more than one type of share. There is a special case of share called "Ordinary" - which is an actual piece of the business.
Would you believe you can create different classes of share which are NOT pieces of the business which can be used for various purposes. Its unlikely for a small Limited Company you would want anything other than "Ordinary" shares.
The Ordinary shares: you create a number of them which represents ownership in the Company. For a small Company the number often chosen is 100. My Company has 1000 shares as this allows us to divide up ownership further. Each one of these shares has a "Nominal Value" - say £1. So the share value of the Company would be £100 or in my case £1000.
"Number Allotted". This is the number of shares that are owned by individuals. Would you believe that the Company does not have to issue all its shares! So (for example) of my 1000 shares about 350 are still owned by the Company itself rather than any particular shareholder....
Don't forget that once you have created these shares in order to actually own them you must buy them - bonkers - so its usual to create a company with 100 shares of £1 each so that the owner can buy all 100 for a reasonable sum (£100).
I actually had to stump up £350 for my shares when I started the business...
Hope this helps...if in doubt..seek professional help. I can recommend an excellent firm in my area if its relevant.
>> Edited by Don on Monday 10th November 18:57
Would you believe you can create different classes of share which are NOT pieces of the business which can be used for various purposes. Its unlikely for a small Limited Company you would want anything other than "Ordinary" shares.
The Ordinary shares: you create a number of them which represents ownership in the Company. For a small Company the number often chosen is 100. My Company has 1000 shares as this allows us to divide up ownership further. Each one of these shares has a "Nominal Value" - say £1. So the share value of the Company would be £100 or in my case £1000.
"Number Allotted". This is the number of shares that are owned by individuals. Would you believe that the Company does not have to issue all its shares! So (for example) of my 1000 shares about 350 are still owned by the Company itself rather than any particular shareholder....
Don't forget that once you have created these shares in order to actually own them you must buy them - bonkers - so its usual to create a company with 100 shares of £1 each so that the owner can buy all 100 for a reasonable sum (£100).
I actually had to stump up £350 for my shares when I started the business... Hope this helps...if in doubt..seek professional help. I can recommend an excellent firm in my area if its relevant.
>> Edited by Don on Monday 10th November 18:57
It's not "bonkers". You are not the company. You must "buy in" to the company in order to own it. The issuing of the shares to you by the company is the method by which you acquire a stake in the company. For the transaction to be valid, comsideration must pass from the individual to the company in exchange for the shares. In most cases, this consideration will be in the form of "cash".
Share Capital in a company is classified as "Authorised" and/or "Issued". "Authorised" is the maximum amount ALLOWED to be issued by the company as set out in the company's Memorandum and Areticles of Association. The comapny can increase the "Authorised" amout of shares by passing a Special Resoultion amending the Memorandum and Articles.
Share Capital in a company is classified as "Authorised" and/or "Issued". "Authorised" is the maximum amount ALLOWED to be issued by the company as set out in the company's Memorandum and Areticles of Association. The comapny can increase the "Authorised" amout of shares by passing a Special Resoultion amending the Memorandum and Articles.
eric mc said:
It's not "bonkers". You are not the company. You must "buy in" to the company in order to own it.
I know, I know...but it seems that way when you've just paid to instatiate the business that you then have to buy it! It all makes perfect sense, of course..
But your terminology is better remembered than mine. Well done. Its been a while since I've had to worry about it. My business is now ten years old and is very, very stable in terms of ownership...
I've only ever completed row one. I would suggest that the columns are there to allow for the different Classes of sheres eg. "Ordinary" shares or "Preference" shares (there are other more obscure versions too).
It's not the end of the world if the form is not filled in exactly as Companies House intended. At the worst, they will return the form to you with a suggestion as to where you have gone wrong.
Are all the shares being allocated "Ordinary"?
It's not the end of the world if the form is not filled in exactly as Companies House intended. At the worst, they will return the form to you with a suggestion as to where you have gone wrong.
Are all the shares being allocated "Ordinary"?
eric mc said:
I've only ever completed row one. I would suggest that the columns are there to allow for the different Classes of sheres eg. "Ordinary" shares or "Preference" shares (there are other more obscure versions too).
It's not the end of the world if the form is not filled in exactly as Companies House intended. At the worst, they will return the form to you with a suggestion as to where you have gone wrong.
Are all the shares being allocated "Ordinary"?
Thanks for all the advice again! much appreciated!
Yeah all the shares are ordinary. So if I set an authorised share capital of £100 and my business partner & I take 50% each where does the money go. Does it go in the accounts as capital?
The "Authorised" share capital is the MAXIMUM number of shares the company can issue. However - it may only want to ISSUE two shares (one each) or it can ISSUE the full hundred (50 each). Whatever is decided, the new shareholders should really ensure that the appropriate amount of cash is placed in the company bank account.
The accounting entry (if you're interested)is -
Debit - Bank Account
Credit - Share Capital Account
>> Edited by eric mc on Tuesday 11th November 13:43
The accounting entry (if you're interested)is -
Debit - Bank Account
Credit - Share Capital Account
>> Edited by eric mc on Tuesday 11th November 13:43
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