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The company's authorised share capital is the capital which the company has been authorised to issue. The level of authorised capital is under the control of the shareholders, either as original subscribers when signing the Memorandum of Association or subsequently by special resolution. The authorised capital can be split into different classes with different rights as to voting, participation in profits, etc, or different denominations. For example, it is possible to create preference shares, which may be redeemable, providing there are shares in issue which are non-redeemable.
Shares may be issued at a premium in which case the uses of the resulting share premium account are restricted. However, one such use is the payment of any premium due on the redemption of redeemable preference shares.
Under local company law the regulation of prospectuses (other than for unit trusts and open-ended investment vehicles) is minimal. However the consent of the Finance and Economics Committee is required for the offer for subscription or sale of any securities in the Island of any company incorporated outside Jersey. Such consent is not required if the company is incorporated in Great Britain and a public offer in the same terms is being, or has been within the preceding twelve months, circulated in Great Britain. The desired form of a prospectus is not specified, but it would normally be expected to follow the pattern of those prepared under UK law and will have to comply with the requirements of any stock exchange on which the securities are to be quoted.
Subject to certain conditions, including the passing of a special resolution by the members of the company, a Jersey company may purchase its own shares.
A reduction of share capital is permitted only where the company has passed a special resolution and the court approval has been obtained. However, this procedure is used very infrequently due to the possibility of a company purchasing its own shares.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
For further information contact Jonathan G. Hooley on Tel (indirect line): + 44 (0) 1481 721000, Tel (direct line): +44 (0) 1481 719544, Fax: +44 (0) 1481 722373.
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