Statements of Capital

How has the Companies Act 2006 (finally implemented on 1 October last year) affected day to day company administration?

Company secretaries, accountants and lawyers have had to get used to a new set of forms, but these are largely self-explanatory.

It is disappointing that four sides of paper are now required to deal with resignation as director and secretary of a company (rather than the single side which was previously needed) but this is hardly likely to cause any sleepless nights. More and more companies are using the Companies House web filing service in any event, which makes the majority of paper forms irrelevant.

However, there is one requirement which seems to have caused some confusion (including at the Department for Business Innovation and Skills) – the infamous "Statement of Capital".

The Statement of Capital is a new concept introduced by the 2006 Act. In principle it is fairly simple – a statement of the issued share capital of the company which must be delivered to Companies House when various events take place (for example the incorporation of a company, an allotment of shares or filing of an annual return).

In practice the Statement of Capital is (in most cases) incorporated in the forms which need to be delivered to Companies House rather than requiring a separate document.

The core of the Statement of Capital is a simple statement of the total number of shares in the company and the aggregate nominal value of these shares. An example can be found on the Companies House website here.

For each class of shares the Statement of Capital must show:-

• Prescribed particulars of the rights attaching to the shares (see below)


• The total number of shares of that class


• The aggregate nominal value of shares in the class; and


• The amount paid up and unpaid on those shares (including any share premium).

The last requirement can be difficult for companies with complex share structures and BIS are currently consulting with various "stakeholders" about how these companies will deal with producing Statements of Capital. For the time being the advice is basically for them to take their best shot as Companies House will reject forms if this information is left blank in the Statement of Capital.

The prescribed particulars of the rights attaching to the shares comprise:-

• Voting rights (including those which only arise in certain circumstances – e.g. swamping rights)


• Rights to receive a dividend


• Rights to receive a capital contribution on a winding-up


• Whether the shares are redeemable at the option of the company or the shareholder

These rights will be set out in the articles of association of the company (together with any supplemental shareholder resolutions which may have been passed in order to vary those rights).

For a straightforward company with a single class of ordinary shares, the Statement of Capital will be easy to complete. The Companies House guidance note on Statements of Capital even has some standard wording (see section 13) which can be used for these types of companies if they have adopted articles based on the model articles contained in the Companies (Model Articles) Regulations 2008.

However, the same guidance makes it clear that particulars of the rights attaching to the shares need to be set out in full.

Statements such as "the rights are set out in the articles of association" or "the shares rank pari passu with the existing shares in the company" will result in the form being rejected.

For companies with a complex share structure, this can make completing the Statement of Capital quite a technical exercise. Indeed, the Companies House guidance recognises that companies may need to seek professional advice to assist with this.

It is less than helpful for new filing requirements to put companies in a position where they may have to incur professional fees in order to complete standard forms. However, if you do need help with this what is the best way to keep costs to a minimum?

Firstly, you will need to make sure that the copy of your company’s articles of association filed at Companies House is up to date (which of course it should be) and that any resolutions creating or amending share rights have also been duly filed.

Secondly, agree a fixed price with your solicitor for reviewing the company’s articles  and any relevant resolutions and producing a pro-forma Statement of Capital for you to use.

Once you have this it should be easy to keep track of any new share issues or changes to share rights in the future.