A company’s share capital is the fund to which a company’s shareholders contribute in cash or in kind in return for their shares in the company
What is a share?
Holding a share in a company confers an interest in that company and a variety of rights, interests and obligations on the shareholder. Shares are the mechanism most commonly used for ownership of a company
Classes of Shares
A company may issue shares in different classes, each carrying different rights and obligations, currencies and nominal values. The main areas where there may be differences are:
- voting rights;
- dividend rights;
- participation rights in a winding up; and
- participation rights to any surplus assets in a winding up
Shareholders
A shareholder is a member of a company whose liability is limited to the amount unpaid on its shares. The first members are the subscribers to the company’s constitution at the time of incorporation
A person may become a Shareholder by:
- First subscribers on incorporation
- Allotment of Shares
- Transfer of Shares
- Transmission of Shares
Common Terms
- Authorised share capital:
- The aggregate of the nominal value of all shares which the company may issue
- Optional for an LTD and mandatory for DAC, PLC & ULC
- Typically set at €100,000 or €1 million however it may be increased
- Nominal value of a share:
- also known as its par value or face value, is its stated monetary value which may not have any relation to the real market value of that share or the shareholder’s interest in the company
- Issued share capital:
- is the aggregate nominal value of all shares which have been issued, taken up by the members and are currently in issue, whether or not they are fully paid up
- Undenominated Capital: in relation to a company, means the amount of the company capital from time to time which is in excess of the nominal value of its issued shares and shall be deemed to include any sum transferred as referred to in sections 106(4) and 108(3)
- Company capital: in relation to a company, means—
- (a) the aggregate value, expressed as a currency amount, of the consideration received by the company in respect of the allotment of shares of the company; and
- (b) that part of the company’s undenominated capital constituted by the transfer of sums referred to in sections 106(4) and 108(3) and subsection (2) supplements this definition;
- There is included in the definition of “company capital” in subsection (1) any amounts standing, immediately before the commencement of this section, to the credit of—
- (a) the company’s share premium account (within the meaning of the prior Companies Acts);
- (b) its capital redemption reserve fund (within the meaning of those Acts); and
- (c) its capital conversion reserve fund
- Share premium:
- any value received in respect of the allotment of a share in excess of its nominal value shall be credited to and form part of undenominated capital of the company and, for that purpose, shall be transferred to an account which shall be known, and in this Act is referred to, as the ‘share premium account
- Share premium is also included in the definition of ‘company capital’
- the premium is subject to capital maintenance rules and therefore the share premium account is not a distributable reserve.
- May convert any of its undenominated capital into shares for allotment as bonus shares to the existing shareholders and this is not considered to be a distribution as there is no actual reduction in the capital.
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