Shares
Company Law
Features of Shares (per Courtney pp447-451)
•A share is a chose in action (without a physical existence but protected by legal action)
- Immaterial object that gives you certain rights protected by legal action, enforcable right against
company and that’s what the share is
•A share confers no interest in the company’s assets (Kerry Co-Op Creamery Ltd. v An Bord Bainne Co-
op Ltd)
- 10% shares does not mean you own 10% of the ocmpany or its assets, slp, cant be owned in
legal sense, owns its own assets, shareholders do not.
- Rights shareholders have are analogous to what you would expect an owner to have over
property, but cannot call them the owner of a company.
•A share is personal estate rather than real estate (s.66(5)
- Not land but personal and personally owned by you, your own property
•A share confers contractual rights and obligations –”the s.31 contract” (“Subject to the provisions of
this Act, the constitution shall, when registered, bind the company and the members of it to the same
extent as if it had been signed and sealed by each member, and contained covenants by the company
and each member to observe all the provisions of the constitution and any provision of this Act as to the
governance of the company.”) which are defined in the Constitution.
- Once they have agreed and registered, becomes contract between share holders and company
between them.
- Nexus of contracts – Irish idea, strongest argument for that viewing constitution as contractual.
•A share confers an interest in the company, a property right (cf. a bondholder has rights against the
company)
- Particularly shareholders and directors.
•A share confers statutory rights and obligations pursuant to the Companies Act 2014
- Winding up of the company surplus of assets etc
•A share confers interests and rights protected by the Constitution
- Piece of property that attracts constitutional protection
-
REMINDER
There is no direct connection between the “share” in the company and any particular assets. (Kerry
Co-Op Creamery Ltd. v An Bord Bainne Co-op Ltd [1990] ILRM 664)
, - Not to say no connection at all, if a company is doing well share increases, badly then it
decreases, indirect relationship
- Not giving shareholder direct interest in the company a direct ownership or proprietary right
over the company and not allowing a shareholder to come in and take whatever they want or
even to dictate the day to day management of the company as that is by design left to directors.
TERMINOLOGY
•Authorised Share Capital = the amount of share capital with which company proposes to be registered
(set out in Constitution). It comprised Issued and Unissued Share Capital.
- Company will say in constitution that they are authorized to issue a certain amount of shares,
out of authorised share capital you can issue it.
- Process; through allotment
•“Allotment” = the creation of new shares and the conferral of a right on a person to be included in the
register in respect of those shares (s.70(6))
•Share Certificate = a legal document that certifies ownership of a specific number of shares.
Alternatively, shareholders may hold their shares in electronic form (“dematerialisation”)
•Settlement = following a transaction, the delivery of securities to the buyer against the delivery of
cash to the seller. - can be time dely between agreeing to be shareholder and settlement where the
shares have been delivered and paying money etc. Case law area.
•Par Value = The nominal (non-market) value of the shares.
- Every share has to have a nominal value attached, not the market value of the shares, market
value is what they go for on the stock market.
- Cant discount shares and trade for less than their par value.
- Usually set at low number, never sell for less and typically trade for over it – market value.
-
Classes of Shareholders
Ordinary Shareholders
•Owners of ordinary or common shares.
•No right to dividend. (payment to shareholders when it chooses to, doesn’t have to)
•Value is residual to all other claims
•Voting rights set out in Companies Act and constitution.
- Last to be paid in grand scheme of things, residual money at the end, group with the most
voting rights.
- Minimum voting rights set out in Companies Act
Company Law
Features of Shares (per Courtney pp447-451)
•A share is a chose in action (without a physical existence but protected by legal action)
- Immaterial object that gives you certain rights protected by legal action, enforcable right against
company and that’s what the share is
•A share confers no interest in the company’s assets (Kerry Co-Op Creamery Ltd. v An Bord Bainne Co-
op Ltd)
- 10% shares does not mean you own 10% of the ocmpany or its assets, slp, cant be owned in
legal sense, owns its own assets, shareholders do not.
- Rights shareholders have are analogous to what you would expect an owner to have over
property, but cannot call them the owner of a company.
•A share is personal estate rather than real estate (s.66(5)
- Not land but personal and personally owned by you, your own property
•A share confers contractual rights and obligations –”the s.31 contract” (“Subject to the provisions of
this Act, the constitution shall, when registered, bind the company and the members of it to the same
extent as if it had been signed and sealed by each member, and contained covenants by the company
and each member to observe all the provisions of the constitution and any provision of this Act as to the
governance of the company.”) which are defined in the Constitution.
- Once they have agreed and registered, becomes contract between share holders and company
between them.
- Nexus of contracts – Irish idea, strongest argument for that viewing constitution as contractual.
•A share confers an interest in the company, a property right (cf. a bondholder has rights against the
company)
- Particularly shareholders and directors.
•A share confers statutory rights and obligations pursuant to the Companies Act 2014
- Winding up of the company surplus of assets etc
•A share confers interests and rights protected by the Constitution
- Piece of property that attracts constitutional protection
-
REMINDER
There is no direct connection between the “share” in the company and any particular assets. (Kerry
Co-Op Creamery Ltd. v An Bord Bainne Co-op Ltd [1990] ILRM 664)
, - Not to say no connection at all, if a company is doing well share increases, badly then it
decreases, indirect relationship
- Not giving shareholder direct interest in the company a direct ownership or proprietary right
over the company and not allowing a shareholder to come in and take whatever they want or
even to dictate the day to day management of the company as that is by design left to directors.
TERMINOLOGY
•Authorised Share Capital = the amount of share capital with which company proposes to be registered
(set out in Constitution). It comprised Issued and Unissued Share Capital.
- Company will say in constitution that they are authorized to issue a certain amount of shares,
out of authorised share capital you can issue it.
- Process; through allotment
•“Allotment” = the creation of new shares and the conferral of a right on a person to be included in the
register in respect of those shares (s.70(6))
•Share Certificate = a legal document that certifies ownership of a specific number of shares.
Alternatively, shareholders may hold their shares in electronic form (“dematerialisation”)
•Settlement = following a transaction, the delivery of securities to the buyer against the delivery of
cash to the seller. - can be time dely between agreeing to be shareholder and settlement where the
shares have been delivered and paying money etc. Case law area.
•Par Value = The nominal (non-market) value of the shares.
- Every share has to have a nominal value attached, not the market value of the shares, market
value is what they go for on the stock market.
- Cant discount shares and trade for less than their par value.
- Usually set at low number, never sell for less and typically trade for over it – market value.
-
Classes of Shareholders
Ordinary Shareholders
•Owners of ordinary or common shares.
•No right to dividend. (payment to shareholders when it chooses to, doesn’t have to)
•Value is residual to all other claims
•Voting rights set out in Companies Act and constitution.
- Last to be paid in grand scheme of things, residual money at the end, group with the most
voting rights.
- Minimum voting rights set out in Companies Act
