FULLY PAID / PARTLY PAID SHARES TO BE TAKEN INITIALLY

In most cases, shares are taken by a shareholder as 'fully paid', meaning once the company is incorporated, the shares are taken up by the shareholder and the shares are paid for in full and no further moneys (or other consideration) is to be paid (or provided) by the shareholder. In such a case you would answer the question 'no'.

Alternatively, and less commonly, shares are taken by a shareholder as 'partly paid', meaning that once the company is incorporated, the shares are taken up by the shareholder and at that time the shares are paid for in part only and further moneys (or other consideration) remains to be paid (or provided) by the shareholder. An example would be, say, £1 shares where £0.25 is paid when the company is incorporated and the shares are taken up and the remaining £0.75 is paid when calls are made in respect of the shares in due course by the directors.

Restriction applying to public companies
A public company must not allot a share except as paid up at least as to one-quarter of its nominal value and the whole of any premium on it - section 101 of the Companies Act 1985. So if, for example, the company were issuing shares with a nominal value of £1 per share, for the sum of £1.50 per share (i.e. a premium of £0.50 per share) the minimum amount required to be paid up initially would be £0.75 per share (i.e. one-quarter of £1, plus the whole of the premium). This restriction does not apply to shares allotted in pursuance of an employees' share scheme - section 101(2) of the Companies Act 1985. The expression 'employees' share scheme' is defined in section 743 of the Companies Act 1985 which provides as follows:

743 'Employees' share scheme'
For the purposes of this Act, an employees' share scheme is a scheme for encouraging or facilitating the holding of shares or debentures in a company by or for the benefit of -


(a)
the bona fide employees or former employees of the company, the company's subsidiary or holding company or a subsidiary of the company's holding company, or


(b)
the wives, husbands, widows, widowers or children or step-children under the age of 18 of such employees or former employees.
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