Companies House Form 88(2)

Companies House Form 88(2) Return or Allotments of Shares

Companies are being formed everyday and many of these companies on formation decide whether its member’s liability will be limited by shares. Different members agree to take on shares and these are regarded as allotted on incorporation. These share holders then become members of the company.

As the company grows more people may be admitted as members of the company and are allotted their own shares. This is done using the form 88(2) Return allotment of shares.

Shares cannot be allotted without the authority of the existing shareholders. A director could not decide to allot them on his own authority. The authority is normally determined at incorporation or given to the directors by resolution at a general meeting of the company. The shares cannot be allotted for an amount less than the nominal value of the shares as this would be seen as a discount which is not allowed.

A company with share capital must have a resolution before the shares are allotted to new members. Any public or private company may give authority by an ordinary resolution and this must be for a fixed period of up to five years. This resolution along with form 88(2) is then sent to Companies House. This must be done within one month of the allotment of shares.

Shares can be allotted for payment:

• wholly for cash,
• partly for cash and partly for non cash payment
• wholly for a non cash payment

So, Companies House require that Form 88(2) must also include how the shares are going to be paid for and a brief description of the non-cash payment if this is applicable. It has to be accompanied by a written contract under which title of the shares is constituted.

An allotment of bonus shares must also be declared to Companies House using form 88(2). Bonus shares often occur when a company decides to use any undistributed profits as shares. The shareholders to whom they are issued do not have to pay anything, but Companies House must be notified.

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* 88(2) – return allotment of shares
PDF example of 88(2) return allotment of shares