Regulations have been made which prescribe a new, lower, euro equivalent for a public company’s authorised minimum share capital. The Regulations also set out the mechanics for determining whether a company’s share capital has fallen below the authorised minimum when it is denominated in a foreign currency.
Prescribed euro equivalent
A public company must not do business until it has obtained a trading certificate and it can only obtain a trading certificate if the nominal amount of its allotted share capital is not less than the authorised minimum (section 761 of the Companies Act 2006). In addition, a private company may not pass a resolution to re-register as a public company unless its allotted share capital is not less than the authorised minimum (section 91 CA 2006). The authorised minimum is £50,000 or the prescribed euro equivalent. The new Regulations prescribe the euro equivalent as €57,100 from 1 October 2009. This is less than the prescribed euro equivalent under the Companies Act 1985, which was €65,600. The Regulations contain transitional provisions which provide that the euro equivalent will be treated as €65,600 in relation to applications for trading certificates received before 1 October 2009 and in certain other circumstances.
Share capital denominated in a foreign currency
A public company must re-register as a private company where a reduction of capital or a mandatory cancellation of shares causes the nominal value of its allotted share capital to fall below the authorised minimum (sections 650 and 662 CA 2006). Once a public company has obtained a trading certificate, it is free to redenominate its share capital into any currency. If a company has shares denominated in a currency other than sterling or euro, the Regulations apply to determine how to calculate whether the share capital has fallen below the authorised minimum.
The Companies (Authorised Minimum) Regulations 2009 (SI 2009/2425) come into force on 1 October 2009 and are available at http://www.opsi.gov.uk/si/si2009/pdf/uksi_20092425_en.pdf
An explanatory memorandum is available at http://www.opsi.gov.uk/si/si2009/em/uksiem_20092425_en.pdf
