Background
The Companies, etc. (Amendment) Act 2003 substituted section 71 into the Companies Act 1931. Section 71 prohibits a company incorporated under the Companies Acts 1931-2004 (a “1931 Act company”) from issuing a warrant stating that the bearer is entitled to the shares therein specified (“bearer shares”). However, section 71(4) states that any bearer share lawfully issued on or before 1st April 2004 remains valid in respect of the rights and obligations attached to it (although the bearer share must be converted into a registered share in order to exercise any rights attached to the bearer share).
Companies (Prohibition of Bearer Shares) Act 2011
The Companies (Prohibition of Bearer Shares) Act 2011 (the “Act”) received Royal Assent on 12th October 2011. The Act substitutes a new section 70A into the Companies Act 1931, subsection (1) which requires every 1931 Act company to ensure that any bearer share is converted into a registered share.
A “bearer share” is defined in the Act to mean a share which is represented by a certificate, warrant or other document which states or otherwise indicates that the bearer of the certificate is the owner of the share (and includes a share warrant within the meaning of section 71).
Implications of the Act
Failure by a company to comply with new section 70A(1) within six months of the enactment of the Act will be an offence (the “offence”), the penalty for which will be a fine (which will not be limited except in the case of summary conviction when it is limited to £5,000).
Read the full article here: Companies (Prohibition of Bearer Shares) Act 2011