UK LTD JOINT SHAREHOLDINGS
A huge number of companies have joint shareholdings within their register. Below most important rules related to joint shareholdings are explained.
A company may register a share transfer or allotment of shares into the joint names of any number of joint holders.
Many companies limit the maximum number of joint shareholders via the Articles of Association for practical reasons.
Commonly, an upper limit of 4 or 10 joint holders is set up.
Even where a limit is not defined in the Articles of Association, private company Model Article 26 gives directors the right to refuse to register any share transfer, which they might choose to do if a large number of joint transferees are included on a stock transfer form.
JOINT SHAREHOLDERS RIGHTS
Section 286 of the Companies Act 2006 confers more rights to the joint shareholder named first (or senior) in the company’s register of members than to the other joint holders.
The Companies Act confers to the first named holder the right to vote at company meetings, appoint a proxy and sign any shareholders’ written resolutions.
The law does not give these same rights to other joint shareholders.
The company is obliged to communicate to the first named joint shareholder only any of the following:
- Notice of annual and extraordinary company meetings;
- Dividend notices and vouchers;
- An offer in respect of a rights issue or bonus issue of shares.
It’s the first named joint shareholder (senior holder) with whom the company would interact in respect of a joint shareholding.
A company may send information to all joint shareholders, but the law does not require it.
SHARE CERTIFICATE FOR JOINT SHAREHOLDER
Model Article of association for limited companies 24 states that only one share certificate needs to be issued in respect of a joint shareholding. This rule will apply to Ltd that have adopted the Model Articles.
Joint shareholders could request to change the order in which they are recorded.
The company’s Director will accept this ensuring that the request is in writing, confirms that the shares have not been sold or otherwise disposed of is and signed by all the joint shareholders.
CIRCUMSTANCES THAT REQUIRES ALL THE JOINT SHAREHOLDERS TO AGREE
signatures of all joint shareholders is usually required in the following circumstances:
- On dividend mandates;
- As part of an agreement to receive notices and other documents via email;
- To split one holding into constituent parts or consolidate multiple joint holdings.
Also the transfer of a joint holding requires the signature of all the joint shareholders on the stock transfer form in order for a valid transfer to take place. This requirement applies to all types of transfer – so include gifts and other disposals as well as a sale of shares.
There can also be obligations shared by all the shareholders in respect of a joint holding of shares – in particular, when shares are unpaid or partly paid the liability to pay calls tends to be joint and several.
DEATH OF A JOINT SHAREHOLDER
If a joint shareholder dies, the shares pass automatically to the remaining joint holder(s). Shares held jointly are not transferred according to the deceased’s will or the law of intestacy.
The company’s register of members will be updated to show the holding vesting in the name(s) of the surviving joint shareholder(s).
Author: EMILIO MENEGHELLA