Company Formation

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Nominal, issued, transferred and allotted share capital: The nominal share capital of a company is the potential amount of shares that a company has available for future distribution. The issued share capital is literally the amount of shares that a company has issued out of its potential nominal share capital. In the case of most domestic English & Welsh companies the company registration agent will initially issue the minimum number of shares, normally one or two, with an individual nominal value of normally £1.00 each. After the receipt of the company documentation the permanent company secretary will normally lodge the stock transfer form(s) to officially transfer the shares issued by the company registration agent to the permanent shareholders. This being done, at a nominal charge, by submitting a stock transfer form for stamping with the Stamping Office. Allotted shares are literally those shares that the permanent board of directors has decided to issue over and above those initially issued by the company registration agent. They are referred to as allotted because they are being issued for the first time and therefore are not being transferred from one party to another

The value of shares: The term "nominal" value is used for a company's shares since the true value will depend on how much a third party or even an existing shareholder is willing to pay for shares in the company at any given point in time. Thus, the value of a company's shares will depend on market forces in exactly the same way as witnessed with the stock market. It is therefore possible that someone could pay 1 penny for a share with a nominal value of UK£1.00 or UK£100.00 depending on a company's viability. Nevertheless, it must be remembered that all shares with a particular nominal value must have had at least that nominal value paid into the company coffers no matter any future valuation. If required, an individual/company may partly pay for a share issue but this is done simply to allow for flexibility, eventually the full amount must be paid up within a certain period of generally no more than 5 years or as laid down in the company's Memorandum & Articles of Association