New Companies Ordinances P.2: Changes to Share Capital and Directors

Mandatory Regime of No-par: A company’s shares will have no nominal value and the new rule applies to all local companies with a share capital. The new ordinances contain transitional and deeming provisions relating to the move from par value shares to no-par value shares to aid smooth transition. All shares issued before the commencement date of the new ordinances are deemed to have no par value and a conversion process is not required. Amounts standing to the credit of a company’s share premium account and capital redemption reserve account become part of the company’s share capital. Individual companies may review their particular situation to determine if specific changes to their constitutional documents, contracts entered into by the companies etc. are required, having regard to their circumstances.

Statement of Capital: is included in a return or notice in a specified form, which is required to be delivered for registration whenever there is a change in a company’s share capital, e.g. an allotment of shares or a permitted alteration of share capital. The statement is a ‘snapshot’ of a company’s latest share capital and it will ensure up-to-date share capital information.

Restricting Corporate Directorship: Every private company must have at least one director who is a natural person, and a 6 months grace period is given after the commencement of the new ordinances for existing companies to comply with the new requirement.  A notification of change of directors should be delivered for registration in the specified form ND2A within 15 days of the changes.

 (Changes will be effective on 3rd March 2014)

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