Shares authorised/issued capital

[dude69]

My company was incorporated with authorised share capital of 100 shares of £1 each.

1 share was then issued to me, and 1 share to my wife.

Unfortunately I think I erred on my last returns and put that the remaining 98 shares are owned by my Ltd.

I.e.

Shareholding 1: 1 ordinary share owned by me
Shareholding 2: 98 ordinary shares owned by MyLtd
Shareholding 3: 1 ordinary shares

I believe this was my error when I did the first return, viz. not understanding the difference between issued and authorised capital: I had AUTHORISED capital of 100 shares, but only 2 shares should have been issued.

On my annual returns I show in the assets the 2 * £1 debts owed by me and my wife for the shares, and in the liabilities the 2 shares. I don't account for the 98 shares.

This has come to light because I have applied for a business deposit account with Northern Rock, who have rejected it saying that the company is 98% owned by itself. Which I guess is true.

I never actually formally issued the shares, so I guess I need to correct the returns showing 98 shares owned by the company so that issued capital is actually £2, not £100; authorised capital remains as £100.

Any ideas?

[malvolio]

Start from www.companieshouse.gov.uk - there's a set of forms to manage share allocations (which is what you need to do). May cost a few quid.

[chris79]

Is it not easier to just issue yourself and your wife another 49 shares each? I made a similar mistake when doing mine and ended up giving myself and my other half 500 shares each totalling 1000 issued shares, but it's no big deal, just a bit of maths when doing the odd dividend voucher etc.

[dude69]

Is it not easier to just issue yourself and your wife another 49 shares each? I made a similar mistake when doing mine and ended up giving myself and my other half 500 shares each totalling 1000 issued shares, but it's no big deal, just a bit of maths when doing the odd dividend voucher etc.

possibly, but I guess I see the accounts (which show issued capital of £2) as more sacrosanct than the returns (which show issued capital of £100), so I'd rather reconcile to the former.

From what I have read, if issued capital is transferred to the company, it has the effect of reducing the issued capital anyway, so saying that the company owns 98 shares in itself is a bit contradictory.