| An Important Question about Treasury Shares and Authorized but not Issued Shares 15:52 - Nov 4 with 1542 views | Davillin |
Perhaps LondonLisa, or Uxbridge, or Jackonicko, or someone can answer this two-part question, please.
1. How many, if any, authorized but unissued shares does the club have?
2. How many, if any, treasury shares does the club have? [U.S. and U.K. laws are often nearly identical, but I don't know about the term "treasury shares." These are shares that were authorized, then issued, and then bought back by the club and can be issued to a new shareholder.]
I know that the club bought back the shares of Mel Nurse, but I don't know their present legal status.
The answer to either or both of these questions will have a significant bearing on all of our discussions.
Thanks. |  |
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| An Important Question about Treasury Shares and Authorized but not Issued Shares on 16:15 - Nov 4 with 1520 views | londonlisa2001 |
Dav - don't know the answer to how many the club has, but authorising additional shares is very straightforward. You can either remove any limit there may be on authorised share numbers which could be contained in the articles (via a special resolution) or just increase the limit (via an ordinary resolution).
On Treasury shares - we have the same concept here, but up until last year a private company had to cancel any shares bought back and couldn't hold them as treasury stock. I think the rules have changed to allow a private company to now hold shares bought back (to match PLC rules) but if Mel's shares were bought back by the club, it would have been before the rule change so the shares would have had to have been cancelled. I believe that's the case anyway - can't think any shares would have been bought back after last year when it changed (April ish). |  | | |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 16:18 - Nov 4 with 1508 views | londonlisa2001 |
sorry - I should have also said that sometimes a shareholders' agreement has a limit on authorised share capital as well, so any change to that would have to be subject to the agreement of the parties to the shareholders' agreement if that clause exists in this case (many don't cover this issue though). | | | |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 16:18 - Nov 4 with 1507 views | _ |
Just a suggestion but wouldn't it not be better to keep to one thread as this topic has many aspects and are bound to be relevant to one or more... it just gets confusing. |  |
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| An Important Question about Treasury Shares and Authorized but not Issued Shares on 16:46 - Nov 4 with 1469 views | Davillin |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 16:18 - Nov 4 by _ |
Just a suggestion but wouldn't it not be better to keep to one thread as this topic has many aspects and are bound to be relevant to one or more... it just gets confusing. |
Not at all. I started this so as to not confuse the issues, as the answer to my questions will be an absolute "game-changer." It's that important.
Depending on how many authorized but not issued shares the club has, some or all of those shares could be sold to an "investor," and the money would go to the club, while giving the new "investor" a share of considerable size in the club.
The same applies to treasury shares, if there are any, which according to Lisa is possible.
Now, if the authorized but not issued shares are more than the shares outstanding, a controlling interest could [and I emphasize "could"] be sold without causing the SCFC Board even to break a sweat. What happens with any present shareholders' shares would not affect much how much money the club gets.
The other dangerous scenario is the one in which the club sells those shares in an amount less than enough to give him a controlling interest, whenas he could then buy shares from present shareholders to get to 51%.
This, in my opinion, is the salient and threatening point: The SCFC Board may well be playing a very very dangerous game -- and with someone far more experienced in that game.
Furthermore, with the requisite number of authorized but not issued shares, the Trust must be even more vigilant, or the damage could be done "willy-nilly."
To quote a famous British flying ace, which applies equally here as to combat flying: "Eternal vigilance or eternal rest." [Post edited 4 Nov 2014 16:51]
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| An Important Question about Treasury Shares and Authorized but not Issued Shares on 16:50 - Nov 4 with 1460 views | Davillin |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 16:15 - Nov 4 by londonlisa2001 |
Dav - don't know the answer to how many the club has, but authorising additional shares is very straightforward. You can either remove any limit there may be on authorised share numbers which could be contained in the articles (via a special resolution) or just increase the limit (via an ordinary resolution).
On Treasury shares - we have the same concept here, but up until last year a private company had to cancel any shares bought back and couldn't hold them as treasury stock. I think the rules have changed to allow a private company to now hold shares bought back (to match PLC rules) but if Mel's shares were bought back by the club, it would have been before the rule change so the shares would have had to have been cancelled. I believe that's the case anyway - can't think any shares would have been bought back after last year when it changed (April ish). |
I understand, Lisa, but my question presents the problem of there already being enough authorized but unissued shares.
Authorizing additional shares may be straightforward, depending on a corporation's rules, but not a "slam dunk," whereas if they're there already, it is a "slam dunk.".
I think we need the answers. | |
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| An Important Question about Treasury Shares and Authorized but not Issued Shares on 16:55 - Nov 4 with 1447 views | londonlisa2001 |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 16:50 - Nov 4 by Davillin |
I understand, Lisa, but my question presents the problem of there already being enough authorized but unissued shares.
Authorizing additional shares may be straightforward, depending on a corporation's rules, but not a "slam dunk," whereas if they're there already, it is a "slam dunk.".
I think we need the answers. |
sorry Dav - perhaps I didn't explain clearly enough.
It is so easy these days to authorise shares over here (in fact new companies don't need to do it as such after the new companies act) that it really makes no difference. If the shareholders wanted to do issue shares and were out of authorised shares, they just vote on it (only 50% needed as I said) to raise the limit and then issue them. It'd make absolutely no practical difference at all. | | | |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 16:57 - Nov 4 with 1443 views | londonlisa2001 |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 16:46 - Nov 4 by Davillin |
Not at all. I started this so as to not confuse the issues, as the answer to my questions will be an absolute "game-changer." It's that important.
Depending on how many authorized but not issued shares the club has, some or all of those shares could be sold to an "investor," and the money would go to the club, while giving the new "investor" a share of considerable size in the club.
The same applies to treasury shares, if there are any, which according to Lisa is possible.
Now, if the authorized but not issued shares are more than the shares outstanding, a controlling interest could [and I emphasize "could"] be sold without causing the SCFC Board even to break a sweat. What happens with any present shareholders' shares would not affect much how much money the club gets.
The other dangerous scenario is the one in which the club sells those shares in an amount less than enough to give him a controlling interest, whenas he could then buy shares from present shareholders to get to 51%.
This, in my opinion, is the salient and threatening point: The SCFC Board may well be playing a very very dangerous game -- and with someone far more experienced in that game.
Furthermore, with the requisite number of authorized but not issued shares, the Trust must be even more vigilant, or the damage could be done "willy-nilly."
To quote a famous British flying ace, which applies equally here as to combat flying: "Eternal vigilance or eternal rest." [Post edited 4 Nov 2014 16:51]
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I think I said that technically treasury shares are now possible in a private company but only if a share buy back has happened in the last year and a bit which I don't believe it has. | | | |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 17:02 - Nov 4 with 1430 views | londonlisa2001 |
by the way Dav. I don't quite see why this is relevant?
The understanding is that the current owners wish to sell, in which case issuing new shares doesn't do it for them. They just sell their own shares and job is done.
Any of these hypothetical scenarios of issuing additional shares, whether it be as you suggest, or as Shaky Squirrel (he of the nuts) was suggesting (i.e. by creating a new class of shares) doesn't do what is being suggested, and allow the owners to cash in by selling their own stake? | | | |
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| An Important Question about Treasury Shares and Authorized but not Issued Shares on 19:29 - Nov 4 with 1318 views | Davillin |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 17:02 - Nov 4 by londonlisa2001 |
by the way Dav. I don't quite see why this is relevant?
The understanding is that the current owners wish to sell, in which case issuing new shares doesn't do it for them. They just sell their own shares and job is done.
Any of these hypothetical scenarios of issuing additional shares, whether it be as you suggest, or as Shaky Squirrel (he of the nuts) was suggesting (i.e. by creating a new class of shares) doesn't do what is being suggested, and allow the owners to cash in by selling their own stake? |
It's relevant because it's possible, and dangerous.
It has been my understanding that it is not easy for an SCFC shareholder to sell his/her shares. If I remember correctly, there's a certain amount of board approval (or hoop-jumping) needed. I'm sorry if I'm vague there, but I don't want to go searching.
A private communication informs me that there are authorized but not issued shares, in a considerable number, although it is posited that the fantasy "valuation" of Swansea stock makes them of dubious value. I don't agree, because the definition of "fair market value" is "the price a willing buyer is willing to pay and a willing seller is willing to take," and we haven't seen anything remotely like either. It's still "Fantasyland in Swansealand."
As with everything else, we have to wait and see . . . . | |
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| An Important Question about Treasury Shares and Authorized but not Issued Shares on 19:57 - Nov 4 with 1283 views | londonlisa2001 |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 19:29 - Nov 4 by Davillin |
It's relevant because it's possible, and dangerous.
It has been my understanding that it is not easy for an SCFC shareholder to sell his/her shares. If I remember correctly, there's a certain amount of board approval (or hoop-jumping) needed. I'm sorry if I'm vague there, but I don't want to go searching.
A private communication informs me that there are authorized but not issued shares, in a considerable number, although it is posited that the fantasy "valuation" of Swansea stock makes them of dubious value. I don't agree, because the definition of "fair market value" is "the price a willing buyer is willing to pay and a willing seller is willing to take," and we haven't seen anything remotely like either. It's still "Fantasyland in Swansealand."
As with everything else, we have to wait and see . . . . |
well yes it's possible, but the existence of authorised shares has no practical impact on this?
If additional shares are issued, then all existing shareholders get diluted unless they can afford to exercise their pre emption rights. Indeed, as I've mentioned on a few occasions, unless there is a specific provision in the shareholders' agreement, then a special resolution (75%) of the shareholding can waive these rights.
If the existing shareholders are willing to be diluted, they can just issue shares to a new investor. The existence or otherwise of 'authorised shares' makes absolutely no difference to this. If there are not authorised shares in existence, the shareholders (who are largely the same as the directors) just pass a resolution (ordinary resolution is enough) to increase authorised share capital or with a special resolution they can remove any limit.
I don't understand why the existence of authorised shares is in itself dangerous? It has no impact (which is why the current companies act has effectively removed the concept from UK company law).
My understanding from the discussions on here is that the existing shareholders want to cash out, at least partially. They can't do this by just issuing new shares, since they get no money for that. If, however, you are saying that they do not want to cash out, but are, instead actually looking for investment by issuing new shares, then it's easy and the authorised / not authorised bit makes absolutely no difference. | | | |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 23:17 - Nov 4 with 1207 views | Davillin |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 19:57 - Nov 4 by londonlisa2001 |
well yes it's possible, but the existence of authorised shares has no practical impact on this?
If additional shares are issued, then all existing shareholders get diluted unless they can afford to exercise their pre emption rights. Indeed, as I've mentioned on a few occasions, unless there is a specific provision in the shareholders' agreement, then a special resolution (75%) of the shareholding can waive these rights.
If the existing shareholders are willing to be diluted, they can just issue shares to a new investor. The existence or otherwise of 'authorised shares' makes absolutely no difference to this. If there are not authorised shares in existence, the shareholders (who are largely the same as the directors) just pass a resolution (ordinary resolution is enough) to increase authorised share capital or with a special resolution they can remove any limit.
I don't understand why the existence of authorised shares is in itself dangerous? It has no impact (which is why the current companies act has effectively removed the concept from UK company law).
My understanding from the discussions on here is that the existing shareholders want to cash out, at least partially. They can't do this by just issuing new shares, since they get no money for that. If, however, you are saying that they do not want to cash out, but are, instead actually looking for investment by issuing new shares, then it's easy and the authorised / not authorised bit makes absolutely no difference. |
I truly don't want to debate this, but the one thing you don't write about is control. It will not take a vote at all to authorize the shares already authorized, and there may well be enough to swing control.
I realize that you are working on the finest legal and accounting grounds, but I'm looking at the history of the reputed "investor," who appears -- by several news reports -- to not bother so much with them. And he appears to be more able than any present shareholder -- and especially the trust -- "to exercise his preemptive rights."
All I can say now is that "we'll see." | |
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| An Important Question about Treasury Shares and Authorized but not Issued Shares on 13:38 - Nov 5 with 1123 views | Baptist |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 23:17 - Nov 4 by Davillin |
I truly don't want to debate this, but the one thing you don't write about is control. It will not take a vote at all to authorize the shares already authorized, and there may well be enough to swing control.
I realize that you are working on the finest legal and accounting grounds, but I'm looking at the history of the reputed "investor," who appears -- by several news reports -- to not bother so much with them. And he appears to be more able than any present shareholder -- and especially the trust -- "to exercise his preemptive rights."
All I can say now is that "we'll see." |
Answers
1) The club does not have "authorised but unissued" shares
2) There are no "Treasury shares"
This is a daft (as opposed to "important") question. You do realise that ? The club doesn't issue shares - they are not, and have never been, floated on any exchange or other market - and buy them back on inventory. All ownership is accounted for...
Mel's shares were distributed proportionally among the existing shareholders. [Post edited 5 Nov 2014 13:43]
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| An Important Question about Treasury Shares and Authorized but not Issued Shares on 13:53 - Nov 5 with 1096 views | monmouth |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 13:38 - Nov 5 by Baptist |
Answers
1) The club does not have "authorised but unissued" shares
2) There are no "Treasury shares"
This is a daft (as opposed to "important") question. You do realise that ? The club doesn't issue shares - they are not, and have never been, floated on any exchange or other market - and buy them back on inventory. All ownership is accounted for...
Mel's shares were distributed proportionally among the existing shareholders. [Post edited 5 Nov 2014 13:43]
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And Lisa's point is I believe correct. New shares may be 'created' and issued at will, certainly the companies act has abolished the 'authorised' necessity. If the old companies act applied and shareholders tried to block that with a majority vote then they could block the sale of any 'new' shares anyway and it's not an issue.
If the required vote is gained for new issue and sale then any amount of new shares can be created to facilitate that sale, subject to pre-emption that current shareholders would not take up and the trust could not afford. But I really don't see the issue? Why would existing shareholders want to relinquish control and gain no financial advantage. They will surely sell their existing shares, or a combination of existing shares and new that gives tham and the club money but diluites them and, more importantly dilutes the trust. It's hard to see a winning strategy for the club and our cherished 'fans club' label in any of this, if it goes ahead.
Sorry if I'm missing the point, my head is a bit scrambled this morning. |  |
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| An Important Question about Treasury Shares and Authorized but not Issued Shares on 14:31 - Nov 5 with 1061 views | Davillin |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 13:38 - Nov 5 by Baptist |
Answers
1) The club does not have "authorised but unissued" shares
2) There are no "Treasury shares"
This is a daft (as opposed to "important") question. You do realise that ? The club doesn't issue shares - they are not, and have never been, floated on any exchange or other market - and buy them back on inventory. All ownership is accounted for...
Mel's shares were distributed proportionally among the existing shareholders. [Post edited 5 Nov 2014 13:43]
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I will not respond to an uninformed post or poster. Make of that what you will. | |
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| An Important Question about Treasury Shares and Authorized but not Issued Shares on 14:36 - Nov 5 with 1048 views | Baptist |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 14:31 - Nov 5 by Davillin |
I will not respond to an uninformed post or poster. Make of that what you will. |
Uninformed ?
More informed than you I'm willing to bet.
Still an arrogant berk then Tony (there you go, that's what I've "made" of "that") ? Some things never change ! [Post edited 5 Nov 2014 14:39]
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| An Important Question about Treasury Shares and Authorized but not Issued Shares on 14:45 - Nov 5 with 1033 views | londonlisa2001 |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 13:53 - Nov 5 by monmouth |
And Lisa's point is I believe correct. New shares may be 'created' and issued at will, certainly the companies act has abolished the 'authorised' necessity. If the old companies act applied and shareholders tried to block that with a majority vote then they could block the sale of any 'new' shares anyway and it's not an issue.
If the required vote is gained for new issue and sale then any amount of new shares can be created to facilitate that sale, subject to pre-emption that current shareholders would not take up and the trust could not afford. But I really don't see the issue? Why would existing shareholders want to relinquish control and gain no financial advantage. They will surely sell their existing shares, or a combination of existing shares and new that gives tham and the club money but diluites them and, more importantly dilutes the trust. It's hard to see a winning strategy for the club and our cherished 'fans club' label in any of this, if it goes ahead.
Sorry if I'm missing the point, my head is a bit scrambled this morning. |
no, I'm missing the point as well. It makes no difference to this particular situation at all if shares are authorised or not.
I suspect the situation of 'authorised share capital' is getting confused with common practice in a public company for the shareholders each year to give authority to directors to issue a small number of shares (often 5% or similar) without reverting back to shareholders - this is normally used to cover off stuff like employee options and so on so that the shareholders at large are not being constantly asked everytime a big company wants to give share options as part of an employment package / bonuses and so on. The approval is renewed each year at the AGM.
This isn't the same thing at all though. Before the CA2006 abolished 'authorised share capital' in the UK, companies used to often have millions of shares as 'authorised share capital' that was never issued - it was just a relatively meaningless figure in the articles of association and could be adjusted easily anyway.
Since 2009, a private company in the UK with only one share class doesn't need authority from shareholders to issue new shares (save for any limit in the articles, shareholder agreement and so on). The directors can do it (pre emption rights are maintained).
However, and this is the reason that I'm missing the point here, the overlap with the Swans between the directors and shareholders is such that if directors wish to (and are able to under the company statutes) follow the new provisions and issue shares without approval of the shareholders, then it follows that any 'vote' of the shareholders that would be needed to do this would happen anyway since the directors carry enough votes between them in their capacity as shareholders to do what they want.
And on a practical note, as you point out and as I tried to point out yesterday, why on earth would the existing owners decide to issue shares to dilute themselves rather than sell their own shares. If they doubled the share capital for example, they would wipe half of their own value away for no return. That's just not going to happen. | | | |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 14:53 - Nov 5 with 1015 views | Davillin |
"authorized" shares are shares that are made available for sale by an official act of the company.
"issued" shares are shares that had been authorized and have now been sold, the sale recorded on the books of the corporation, and a stock certificate issued to the shareholders.
Being listed on an exchange is not a prerequisite for authorizing and/or issuing shares. Nor are all registered companies required to be so listed. | |
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| An Important Question about Treasury Shares and Authorized but not Issued Shares on 15:00 - Nov 5 with 1004 views | londonlisa2001 |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 14:53 - Nov 5 by Davillin |
"authorized" shares are shares that are made available for sale by an official act of the company.
"issued" shares are shares that had been authorized and have now been sold, the sale recorded on the books of the corporation, and a stock certificate issued to the shareholders.
Being listed on an exchange is not a prerequisite for authorizing and/or issuing shares. Nor are all registered companies required to be so listed. |
Dav,
believe me when I say that I know what these things are - I even know that the concept of authorised shares has been abolished in the UK! It still applies in the US, but not here .
It doesn't change anything that's been said. | | | |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 15:11 - Nov 5 with 981 views | Davillin |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 15:00 - Nov 5 by londonlisa2001 |
Dav,
believe me when I say that I know what these things are - I even know that the concept of authorised shares has been abolished in the UK! It still applies in the US, but not here .
It doesn't change anything that's been said. |
I refer to your earlier post where you wrote that U.K. corporations must still authorize shares [even though I understand that the technical definition has changed, and it now works a bit differently than it had; and I understand how it now works over there].
I have never even hinted, nor do I privately believe, that you don't know about these things. I know that you do -- and vastly more, and you have proven it with every post.
If my post above had been directed at you, I would have used the "Reply to this message" feature to include your post. In a discussion of a complicated legal matter like this, I thought it necessary to define operative terms.
Please don't you jump on the bandwagon of Davillin-bashers.  | |
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| An Important Question about Treasury Shares and Authorized but not Issued Shares on 15:34 - Nov 5 with 958 views | londonlisa2001 |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 15:11 - Nov 5 by Davillin |
I refer to your earlier post where you wrote that U.K. corporations must still authorize shares [even though I understand that the technical definition has changed, and it now works a bit differently than it had; and I understand how it now works over there].
I have never even hinted, nor do I privately believe, that you don't know about these things. I know that you do -- and vastly more, and you have proven it with every post.
If my post above had been directed at you, I would have used the "Reply to this message" feature to include your post. In a discussion of a complicated legal matter like this, I thought it necessary to define operative terms.
Please don't you jump on the bandwagon of Davillin-bashers. |
Oh right - because it was immediately after mine I assumed, incorrectly, that it was directed at the most recent post since it wasn't specifically directed at another post as a reply.
Now - I think that we are all still getting confused here so to sum up as simply as possible:
There is no longer any concept of authorised shares in the UK. Any company formed under the companies act 2006 doesn't have them (absolutely no restriction on shares that can be issued at all). It is not that the definition has changed - the very notion does not exist.
However, the Swans company was formed before that so I am assuming that in the articles of association, a number is stated for authorised share capital. This may well be vast (it normally is - they tend to be just shoved in by a company formation service, since no one takes any notice of the figure really).
Even when you have this number in the articles, there are 2 possibilities. Firstly, you can (now) just get rid of the limit completely (special resolution needed - 75%). Secondly, you can increase the number to anything you want (ordinary resolution - 50%).
The Swans are also a private company, so are subject to in some cases, different rules to a public company. It is the case that the directors of a private company with a single share class can just issue shares without shareholder approval. For companies formed since 2009 (and therefore under the companies act 2006) without any limit at all on authorised share capital (since it doesn't exist any longer) they can issue as many as they want, unless there is any other limit imposed by company statutes, or shareholder agreement etc.
For companies formed before 2009 (eg. the Swans) the directors of a private company with a single share class can also issue shares without shareholder approval, but they are subject to the limit of authorised share capital if it was not been removed (via the special resolution mentioned earlier). In 99.9% of cases, this will not be an issue, because the limits on authorised share capital tend to be very high (as mentioned before). On the odd occasion where there is not enough authorised capital. an ordinary resolution increases it (again as mentioned).
Now the point you are making, I think, is that an ordinary resolution is still a resolution which needs to be passed, whereas if there are already enough shares authorised, the directors can issue them?
However, this is missing 2 points - 1 of which is practical and 1 of which is commercial.
The practical point is that the directors / shareholders of the Swans overlap to a large extent. Therefore in order for the directors to agree to issue shares, the sam people would automatically agree (as shareholders) to the resolution to increase authorised share capital if necessary. It makes absolutely no sense that they would agree as directors and not as shareholders and therefore, whether there are authorised shares or not is moot.
The commercial point is that the shareholders are never going to agree (even in their capacity as directors) to issue shares to dilute themselves out of value.
Apologies for the repetitious nature of some of these points, just summing up. I think this is all a bit of a red herring. | | | |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 17:25 - Nov 5 with 911 views | _ |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 15:34 - Nov 5 by londonlisa2001 |
Oh right - because it was immediately after mine I assumed, incorrectly, that it was directed at the most recent post since it wasn't specifically directed at another post as a reply.
Now - I think that we are all still getting confused here so to sum up as simply as possible:
There is no longer any concept of authorised shares in the UK. Any company formed under the companies act 2006 doesn't have them (absolutely no restriction on shares that can be issued at all). It is not that the definition has changed - the very notion does not exist.
However, the Swans company was formed before that so I am assuming that in the articles of association, a number is stated for authorised share capital. This may well be vast (it normally is - they tend to be just shoved in by a company formation service, since no one takes any notice of the figure really).
Even when you have this number in the articles, there are 2 possibilities. Firstly, you can (now) just get rid of the limit completely (special resolution needed - 75%). Secondly, you can increase the number to anything you want (ordinary resolution - 50%).
The Swans are also a private company, so are subject to in some cases, different rules to a public company. It is the case that the directors of a private company with a single share class can just issue shares without shareholder approval. For companies formed since 2009 (and therefore under the companies act 2006) without any limit at all on authorised share capital (since it doesn't exist any longer) they can issue as many as they want, unless there is any other limit imposed by company statutes, or shareholder agreement etc.
For companies formed before 2009 (eg. the Swans) the directors of a private company with a single share class can also issue shares without shareholder approval, but they are subject to the limit of authorised share capital if it was not been removed (via the special resolution mentioned earlier). In 99.9% of cases, this will not be an issue, because the limits on authorised share capital tend to be very high (as mentioned before). On the odd occasion where there is not enough authorised capital. an ordinary resolution increases it (again as mentioned).
Now the point you are making, I think, is that an ordinary resolution is still a resolution which needs to be passed, whereas if there are already enough shares authorised, the directors can issue them?
However, this is missing 2 points - 1 of which is practical and 1 of which is commercial.
The practical point is that the directors / shareholders of the Swans overlap to a large extent. Therefore in order for the directors to agree to issue shares, the sam people would automatically agree (as shareholders) to the resolution to increase authorised share capital if necessary. It makes absolutely no sense that they would agree as directors and not as shareholders and therefore, whether there are authorised shares or not is moot.
The commercial point is that the shareholders are never going to agree (even in their capacity as directors) to issue shares to dilute themselves out of value.
Apologies for the repetitious nature of some of these points, just summing up. I think this is all a bit of a red herring. |
Not bad for a professional musician, although you must be an awful cook ;-)
Ha! That was like Baptist sent Dav for detention and Lisa gave him a good dressing down with the cane. | |
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| An Important Question about Treasury Shares and Authorized but not Issued Shares on 17:28 - Nov 5 with 904 views | londonlisa2001 |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 17:25 - Nov 5 by _ |
Not bad for a professional musician, although you must be an awful cook ;-)
Ha! That was like Baptist sent Dav for detention and Lisa gave him a good dressing down with the cane. |
my days as a musician are long behind me I'm afraid other than as a hobby (just as well for my liver though) :-)
and I'm a lovely cook thanks very much | | | |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 17:34 - Nov 5 with 897 views | _ |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 17:28 - Nov 5 by londonlisa2001 |
my days as a musician are long behind me I'm afraid other than as a hobby (just as well for my liver though) :-)
and I'm a lovely cook thanks very much |
I've been thinking it for a while.... It's Stansfield, isn't it....your last name?! | |
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| An Important Question about Treasury Shares and Authorized but not Issued Shares on 17:47 - Nov 5 with 876 views | londonlisa2001 |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 17:34 - Nov 5 by _ |
I've been thinking it for a while.... It's Stansfield, isn't it....your last name?! |
well I've been around the world, but never to Rochdale (actually I'm lying - I've been there to see the Swans !!!)
Great days, although on balance I hope we don't have to go there again :-) | | | |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 19:38 - Nov 5 with 804 views | Davillin |
| An Important Question about Treasury Shares and Authorized but not Issued Shares on 15:34 - Nov 5 by londonlisa2001 |
Oh right - because it was immediately after mine I assumed, incorrectly, that it was directed at the most recent post since it wasn't specifically directed at another post as a reply.
Now - I think that we are all still getting confused here so to sum up as simply as possible:
There is no longer any concept of authorised shares in the UK. Any company formed under the companies act 2006 doesn't have them (absolutely no restriction on shares that can be issued at all). It is not that the definition has changed - the very notion does not exist.
However, the Swans company was formed before that so I am assuming that in the articles of association, a number is stated for authorised share capital. This may well be vast (it normally is - they tend to be just shoved in by a company formation service, since no one takes any notice of the figure really).
Even when you have this number in the articles, there are 2 possibilities. Firstly, you can (now) just get rid of the limit completely (special resolution needed - 75%). Secondly, you can increase the number to anything you want (ordinary resolution - 50%).
The Swans are also a private company, so are subject to in some cases, different rules to a public company. It is the case that the directors of a private company with a single share class can just issue shares without shareholder approval. For companies formed since 2009 (and therefore under the companies act 2006) without any limit at all on authorised share capital (since it doesn't exist any longer) they can issue as many as they want, unless there is any other limit imposed by company statutes, or shareholder agreement etc.
For companies formed before 2009 (eg. the Swans) the directors of a private company with a single share class can also issue shares without shareholder approval, but they are subject to the limit of authorised share capital if it was not been removed (via the special resolution mentioned earlier). In 99.9% of cases, this will not be an issue, because the limits on authorised share capital tend to be very high (as mentioned before). On the odd occasion where there is not enough authorised capital. an ordinary resolution increases it (again as mentioned).
Now the point you are making, I think, is that an ordinary resolution is still a resolution which needs to be passed, whereas if there are already enough shares authorised, the directors can issue them?
However, this is missing 2 points - 1 of which is practical and 1 of which is commercial.
The practical point is that the directors / shareholders of the Swans overlap to a large extent. Therefore in order for the directors to agree to issue shares, the sam people would automatically agree (as shareholders) to the resolution to increase authorised share capital if necessary. It makes absolutely no sense that they would agree as directors and not as shareholders and therefore, whether there are authorised shares or not is moot.
The commercial point is that the shareholders are never going to agree (even in their capacity as directors) to issue shares to dilute themselves out of value.
Apologies for the repetitious nature of some of these points, just summing up. I think this is all a bit of a red herring. |
Thank you for that. I understand everything you wrote.
[Please let this part of the thread end with this if you can. I can no longer burn brain cells on it. As I am certain, neither can you.]
As I understand it there are still more than a million shares "authorized" from the most recent, but pre-change in the law, authorization still on the books as "authorized," but not issued, and that the board would still have to approve issue.
I agree with your penultimate two paragraphs:
"The practical point is that the directors / shareholders of the Swans overlap to a large extent. Therefore in order for the directors to agree to issue shares, the sam people would automatically agree (as shareholders) to the resolution to increase authorised share capital if necessary. It makes absolutely no sense that they would agree as directors and not as shareholders and therefore, whether there are authorised shares or not is moot.
"The commercial point is that the shareholders are never going to agree (even in their capacity as directors) to issue shares to dilute themselves out of value."
With regard to whether this is or is not a "red herring," one of the points was and is that if the Board really wanted "investment" into the club, that can be easily accomplished.
Shareholders selling their shares does not bring money into the club, just brings on a new shareholder and lets the chips fall where they may.
I do fully understand that under the new law, the Board can just "issue" without needing to "authorize" separately.
Thank you for your patience. | |
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