Subdivision of Share Capital

1. Review the Company Articles of Association - Start by reviewing the company's articles of association to understand the existing share structure and any provisions related to sub-division. Ensure the articles allow for sub-division or determine if amendments are needed.

2. Check whether a Shareholders’ Agreement Exists - Even when a sub-division of share capital maintains the same equity holding for each shareholder, it remains essential to ensure compliance with any existing shareholders' agreement in effect.

3. The Board must call a meeting for Shareholders to propose an Ordinary Resolution – The company must then keep a record of the ordinary resolution.

4. The Subdivision takes effect, and the Company must give Notice to Companies House – This is required by section 619 of the Companies Act 2006.

5. Shares are then Issued.

There are various benefits to sub-dividing shares that can vary depending on the specific circumstances and objectives of each company. These include:

• Lower Share Price: Share sub-division reduces the price of individual shares, making them more affordable for a broader range of investors.

• Improved Liquidity: Lower share prices often lead to increased trading activity and liquidity in the market.

• Attracting New Investors: With more affordable shares, a company can attract new investors and potentially broaden its shareholder base.

• Enhanced Market Perception: Smaller share prices can create the perception that shares are more accessible and reasonably priced, potentially enhancing the company's market image.

• Compliance: Share sub-division may be necessary to meet regulatory requirements or stock exchange listing rules.

• Improved Marketability: Lower share prices can make a company's shares more marketable and appealing to a wider range of investors.

• Potential for Stock Splits: Share sub-division is a common step before a stock split, which may further enhance marketability and liquidity.