1. Shares, securities & transfer
Corporate law

2. Nature of shares
The proprietary interest that a person holds in a company is called a share

3. Classes of shares Preference shares Redeemable shares Ordinary shares
Deferred shares

4. Authorisation & issue
MOI sets out the classes of shares & the number in each class that the company is authorised to issue
See sections 36(2) and 36(3)
The board may issue shares (section 38)
If the board issued unauthorised shares – may be ratified within 60 days after issue

5. Consequences of unauthorised shares
If not ratified within 60 days:
Share issue is invalid
Company must pay back the money received
Any share certificate issued is void
Directors personally liable for any loss

6. Employee share scheme
Used to allow employee to get a stake in the company
Is a benefit for employees
Usually funded through a trust – company gives money to trust – trust buys shares & issues to employees

7. Consideration (payment) for shares
Section 40:
Board may only issue shares:
for adequate payment as determined by board
As capitalisation shares
In terms of conversion rights
Consideration is not only money – includes labour

8. securities
Company may issue securities such as bonds, debentures, promissory notes
These are called debt instruments
They are other ways of raising money without giving away a share in the company

9. Certification
Shares must be certificated – securities may be uncertificated
Register must be kept of all securities – “securities register”
Certificate must have certain details – company name, number & class of shares, name of holder

10. Nominees
Person may hold securities in their own name on behalf of someone else unless MOI prohibits
If company asks, nominee must give company details of beneficial owner