Under the provisions of the Small Business Enterprise and Employment Act 2015 UK companies are prohibited from issuing bearer shares from 26 May 2015. Companies which already had bearer shares were required to give notice to bearer shareholders that they must surrender them and have their holdings converted into registered shares by 26 June 2015, and the company had to spell out the consequences of not doing so.
The Institute of Chartered Accountants (ICAEW) pointed out the new rules:
- The company’s notice had to be published in the London Gazette, put in a prominent place on the company’s website (if it has one) or communicated to the bearer shareholders by the method usually used to communicate with them.
- Failure to folllow the prescribed procedure is an offence.
- Any transfer of bearer shares after 26 December 2015 will be void and no rights will attach to those shares (voting or dividends etc). Any distribution to which a bearer shareholder would be entitled will have to be paid into a separate bank account.
- Companies which retained bearer shares on 26 February 2016 were required to apply to the court to cancel them and to pay into court an amount equal to the nominal value of the shares within 14 days of the cancellation together with any suspended distributions to ensure that all bearer shares are cancelled.
The ICAEW published an alert in July 2015’s Taxline, pointing out that the change has not been well publicised.