What is a share reclassification?
Reclassification is most commonly known as the process of changing a share class issued by mutual funds. This can occur when certain requirements have been met, or else it may be caused by changes made by the mutual fund company. In most cases reclassification is not considered to be a taxable event.
What is reclassification of share capital?
On reclassification of authorised capital, it would be necessary to amend Clause V of the Memorandum of Association and Article 3 of Articles of Association. The Resolution seeks approval of Members to reclassify the Share Capital and to amend the said Clauses.
What are the classification of equity shares?
Classification of Equity shares: Equity shares are classified on the basis of different factors. Different kinds of equity share capital are authorized, issued, subscribed, paid up, rights, bonus, sweat equity etc.
How do you change class of shares?
How to change classes of shares. If the directors wish to change the classes of shares described in the articles, or any of the rights attached to a class of shares, an amendment to the articles (see Amending your articles) of the corporation will be required. A special resolution of the shareholders is needed.
How do companies reclassify shares?
To redesignate shares, the members of the company must pass an ordinary resolution with the following details:
- The name of the shareholder and the number of shares to be redesignated.
- The class of shares they originally belong to.
- The class of shares they are being redesignated into.
Can we convert equity shares into preference shares?
Plain re-classification of equity shares to preference shares and vice versa, has the effect of mere alternation of nomenclature of shares, without impacting the subscribed and paid-up share capital. It acknowledged that the prevailing law does not proscribe such a conversion.
What are the two types of equity shares?
Following are the different types of Equity Shares:
- Ordinary Shares. Ordinary shares are those shares a company issues to raise funds to meet long term expenses.
- Preference Shares.
- Bonus Shares.
- Rights Shares.
- Sweat Equity.
- Employee Stock Options (ESOPs)
- Authorized Share Capital.
- Issued Share Capital.
How many equity shares are there?
The Stock market or Equities market is where listed securities are traded in the secondary market. Currently more than 1300 securities are available for trading on the Exchange.
Why do companies consolidate shares?
Consolidations are most commonly used by public corporations, particularly when a corporation’s share price has fallen and it wants to prevent a delisting of its shares or attract more investors (under the theory that increasing the per share price is attractive to investors).
Can ordinary shares be converted?
Shares can be converted from one class to another by way of special resolution or by lodging a notice with ACRA. However, non-redeemable preference shares cannot be converted into redeemable preference shares.