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The Company Share

Legal Regulation and Public Policy

David Milman

In this accessible and insightful book David Milman examines the phenomenon of the company share in an holistic way, tracing the origins of the share and describing the diversity present within the family of shares. Using a comparative approach, key chapters consider the circumstances under which shares are acquired, the property law perspective relevant to shares and the rights and obligations of those who hold shares. The book concludes with some speculation on how the share might evolve in the future in the light of technological change and the development of other capital raising investments.
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Index

David Milman

acquisition (of shares) 46–71

advance indemnity against costs 132

advance voting 159

advisory voting 122, 128

allotment 52

‘alphabet shares’ 44

Alternative Investment Market (AIM) 28

appraisal rights 129

appropriation (financial collateral) 94

arbitration 108, 110

Articles of Association 106–107, 140

asset purchase agreement 53

assignment (of dividend) 116

authorised capital 125

Authorised Persons (FSMA) 10, 51

‘bad leaver’ 77

bankruptcy 57, 73, 131

Bearer Shares 37–38, 99

beneficial ownership 90–92, 131

beneficial shareholders 131

‘Big Bang’ 27

Bilateral Investment Treaties (BITs) 134

Bitcoin 25, 161

‘Black Monday’ (19/10/87) 29

blind capital 69

blind trusts (of shareholdings) 90

Blockchain 161

‘boiler rooms’ 11, 21

bonus issue 56, 113

Brexit 158, 160–161

brokers 9, 46, 93

‘bucket shops’ 27

building societies 19, 31

Buttonwood Tree Agreement 28

buybacks (of shares) 59

buyout orders 57, 79

call option 41

calls 137

‘Calvo doctrine’ 83

cancellation of shares 38

capital duties 161

Capital gains tax 13

capital markets 51

‘Carpetbaggers’ 155

CCPS (Cumulative convertible preference shares) 35

Central registry of beneficial interests 92

charges (on shares) 93–94

charging order 95

charitable companies 3

chose in action 72, 72

class actions 133

class rights 43–44, 140, 175

Clearstream 95

‘cold calling’ 11, 27

community interest companies 20

community shares 42

companies limited by guarantee 3, 20

companies limited by shares 20

compensation 124

competition law 12, 64, 78

compulsory acquisition 79

concert parties 146

conflict of laws 101–102

consolidation (of shares) 15

constitution (of company) 106

contributory 142–143

‘contributory rule’ 143

convergence (of corporate law) xi, 105, 152

convertible debentures 14, 45

CREST (Certificateless Registry for Electronic Share Transfer) 29

cross holdings (of shares) 67

cross listing 28

crowdfunding 163

cumulative voting 121–122

customary international law 134

Darien scheme 65

‘dark pools’ 30

dawn raids 145

debentures 44–45

debt/equity swap 55–67

deceit (tort) 48–49

deferred shares 34

delisting 46, 104

dematerialisation (of shares) 32, 99, 152–153

Deminor rating 105

demutualisation 19, 30, 155, 173

denomination (of shares) 14

depository 38

derivative claims 5, 110, 132

dilution of shareholder power 109

disclosure of interests in shares 145–149

discount 45, 62

discrimination (against foreign shareholders) 111

dispersed shareholdings 133

distributable profits 115, 138

distributable reserves 113

distributions (to shareholders) 112–116, 123

dividend

cap 114

final 112

interim 113

tax free allowance 13

dividend cover 66, 113

dividend policy 66, 113

Dot com bubble 25

‘drag along’ 76

dual class share structure 34, 44, 117

dual listing 28

duration of shareholding 110

earnings per share 87

electronic transfer of shares 29, 99, 152

electronic voting 159

emotional value of shares 68, 89

employee shareholders 22, 39–40

employee share schemes 13, 22, 39–40

Enron 2

Enterprise Investment Scheme 35

equity derivatives 41

equity shares 34

ESMA (European Securities and Market Authority) 164

ESOPs (Employee Share Ownership Plans) 39

ethical investments 68

Euroclear 95

exchange control 13

exit rights 124

expropriation 75, 79

fiduciary 51, 139

financial assistance 22, 59–61

financial collateral 94

Financial Action Task Force (FATF) 37, 153

Financial Conduct Authority (FCA) 29, 51

Financial Markets Law Committee 161

Financial Reporting Council (FRC) 66

Financial Services Authority (FSA) 29

‘flowering shares’ 39

foreign shareholders 6, 157–158, 170

forestalling (dividends) 115

forfeiture 75

forgeries 73

Founders’ shares 34

fractional shares 41

fraud 21–22, 152

freezing order 97, 146–147

FTSE 100 28

FTSE 350 28

FTSE All Share 28

Fungibles 72

global custody (of shares) 10, 95

Global Economic Crisis 165

globalisation 6, 151

Golden shares 40, 84–85

‘goods’ (shares excluded) 11

‘growth shares’ 39

Guinness affair 11

hawking (of shares) 10

‘Hull formula’ 83

‘hurdle shares’ 39

increase of capital 125

indemnity (lost share certificate) 73

indirect investors 16

Initial Coin Offerings (ICOs) 164

Initial Public Offering (IPO) 46

insider dealing 21, 67

insolvency 5

institutional shareholders 130

interim dividend 113

intermediated securities 9, 32, 90, 92

investigation into share ownership 147–148

Investment Association 159

issuer liability 50

jobbers 27

joint shareholding 90

legal capital 58

lien 93, 139

limited liability 23, 137, 141, 166–167

limited liability partnerships 18–19

liquidation 11, 105, 124

listing particulars 32, 50

Listing Rules 50

‘loaded shares’ 34

London Stock Exchange 27–29

majority control 76

management shares 34

mandatory bids 57

mandatory dividends 113

market abuse 11, 51

market for corporate control 10

market investor principle 9

member 16, 70–71, 103

membership 70–71

merger 16–17, 55

merger relief 55

minimum share capital 15, 62, 167

minimum shareholding 108, 110

misrepresentation 49

mutual societies 42

nationalisation 30,81, 171

negligent misrepresentation 49

negotiability 37

negotiable instruments 37

nominal value 41

nominee directors 141

non-binding voting 122, 128

non-voting shares 36

Northern Rock 31, 82, 173

notifiable interests 145

numerosity test 140

official listing 10

open-ended investment company 20

options 41

ordinary shares 34

Organisation for Economic Cooperation and Development (OECD) 7, 37, 153

organised shareholder groups 133

outsider rights 107

overseas shareholders 70

‘Panama Papers’ 37

par value 14, 41

‘Paradise Papers’ 37

participating preference shares 36

partnership share 18, 97

Penny shares 40

pension fund deficits 115, 116, 156

Pensions and Investments Research Consultants (PIRC) 121

Permanent Interest-Bearing shares (PIBS) 42

Personal Equity Plans (PEPs) 13

personal representatives 74

personal rights (of shareholder) 117

personation (of a shareholder) 6

PFI (Private Finance Initiative) 162

poison pill 109

poll 119

political donations by companies 151

pre-emption rights 98, 125–127, 149

preference shares 35, 58

premium 52, 55, 64, 108

private company 20

privatisation 13, 30, 31, 84–85, 172

promoters 51

property 72

ProShare 39

prospectus 46–49

proxy 120

Prudential Regulation Authority 29

PSC register 92, 148–149

public offer 46, 47

‘pump and dump’ 11

put option 41

qua shareholder (rights) 107

qualification shares (of directors) 37, 68–69

RBS rights issue 133

redemption (of shares) 58

redenomination 15

reduction of capital 89, 105

reflective loss 75, 105, 129

Register of members 104

access to 108, 131

rectification of 70–71, 103, 132

Register of people with significant control 92–93, 148–149, 153

registered shares 36

regulatory alignment 161

‘regulatory takings’ xii, 12

relinquishment 130

repurchase of shares 58

residual rights 112

restrictive covenants (in an SPA) 66

restructuring 67

return of capital 123, 129

‘reverse stock splitting’ 15

rights issue 55, 133

Royal Mail 31

‘say on pay’ 151, 159

scheme of arrangement 78

Scrip dividend 113

Scrip issue 56

Scripophily 2

Securities and Investments Board (SIB) 29

Shadow director 141

share certificate 2, 12, 72, 73

share for share exchange 55

share options 41

share premium account 55, 64

Share Purchase Agreement (SPA) 53–54

share pushing 27

share registrars 9

‘Sharesave’ 39

‘Share splitting’ 122

share warrants 37, 38

shareholder 16

shareholder activism 133

shareholder agreement 139

shareholder engagement 158–159

shareholder wealth maximisation 151, 155–157

Sharia Law 1

Situs of shares 101

social enterprise 40

Society of Share and Business Valuers 87

South Sea Bubble 21, 24–25, 176

Sovereign wealth funds 8, 165

speaking valuation 89

‘squeeze out’ 79–80

stakeholders 20, 151, 157

Stamp duty 36

Stamp duty reserve tax 29

State aids 9

statements of capital 9

stewardship 143

Stewardship Code 144

stock 42–43

Stock market 28, 154

stock options 41

‘stock splitting’ 122

Stop notices 95

subscriber 46

subsidiaries 66

Suez Canal 33, 82, 165

surrender (of shares) 75, 100

suspension of listing 97

‘tag along’ 57

Takeover Code 57, 108, 109

Takeover Panel 57

takeovers 57

TALISMAN 29

TAURUS (Transfer and Automated Registration of Uncertified Stock) 29

taxation 12,13, 39, 69, 116

the Pre–Emption Group 126

Tontines 163

transfer of shares 96–100

transfer of undertakings 65, 100

transmission of shares 16

‘transparency and trust’ 37, 153

Treasury shares 38–39, 59

Trustee in bankruptcy 57, 73, 131

trusts (of shares) 90–91, 144

‘Tulipmania’ 24–25

UK Government Investments Ltd 82

UK Listing Authority 50

uncalled capital 137

unfair prejudice 78, 92, 132–133

unit trusts 42

unlimited liability 20

Unlisted Securities Market 28

valuation of shares 85–90

virtual meetings 119, 159

voting rights 111, 117–123

weighted votes 119–120

winding up 11, 105, 124

World Trade Organisation (WTO) 9

yield 66, 87

Yukos affair 74, 134