What exactly are Prescribed Particulars?

Last Updated: Mar 18, 2021

|

Companies HouseCompany FormationLimited CompaniesMemorandum and Articles of AssociationShareholdersShares

Prescribed particulars are a necessary part of the statement of capital. These need to be completed during incorporation by limited by shares companies as well as on filing their confirmation statement. Prescribed particulars detail the rights attached to shares. Essentially they spell out what degree of power and entitlements each share allows the person who owns it. Although there can be some differences between the particulars within different companies and the class of share it is, guidelines for setting out particulars are explained in the Companies Order 2009 (Shares and Share Capital).

Also, it is important that the particulars match with the details given in the articles of association. Most registered companies issue ordinary shares and emulate Model Articles found at Companies House. If you choose to do this then your particulars will include the following standard prescribed particulars as set out by Companies House:

• Dividend rights. i.e. the entitlement to receive distribution of profits through dividend payments.

• Redeemable rights.

• Return of capital.

• Voting rights, including voting rights in exceptional circumstances.

Owning shares in a company will also give that owner certain shareholder rights. These rights are usually to be found detailed in the following documents:

• The company’s articles of association

• Company resolutions; and

• Any shareholder agreements

Prescribed particulars are simply a summary of the rights a shareholder has. These can vary greatly from company to company and even between different share classes within the same company, should they offer them.

A shareholder may find that they hold very detailed and specific rights that wield a greater degree of power and authority in one share class when compared to another share class they may also own in the same company. The prescribed particulars describing the rights for each class will be very different.

What do prescribed particulars describe?

Prescribed particulars will help shareholders understand what they are getting when they buy their shares. No one will be willing to buy shares in a company without knowing what rights those shares will give them. Lets look at some examples of the most common prescribed particulars found within an ordinary share offered by a company limited by shares. These will usually include:

• Voting rights that attach to the shares, if these are offered at all or only offered under certain circumstances

• Rights to dividends or distributions attached to the shares

• Any right to participate in a return of capital, including on winding up of the company

• Whether the shares will be redeemed or may be redeemed at the option of the company or the shareholder

Is there an example template for prescribed particulars I can use?

You can use a template for wording your prescribed particulars, but you must ensure that your wording reflects what is described in detail about shareholder rights as set out in your company’s articles of association.

You may well find that your finished prescribed particulars will end up being very different from the original template you used in the beginning. This is a good thing, especially when you may offer different classes of shares within your company that have very different rights attached to them.

Here is an example of the wording found within an ordinary share prescribed particulars text that pertain to a private company limited by shares and using the Model Articles provided by Companies House. This text relates to voting rights, dividend rights or distributions on winding up the business. If you are going to use this sample text, remember to tailor the wording to suit your needs:

Prescribed particulars example:

• “each share is entitled to one vote in any circumstances” – this wording will reflect the general legal position of one member one vote under section 284 Companies Act 2006;

• “each share is entitled pari passu to dividend payments or any other distribution” – this will reflect a basic right to dividends but any dividend must be made in accordance with the Companies Act and the company’s articles of association; and

• “each share is entitled pari passu to participate in a distribution arising from a winding up of the company” – any distribution from a company being wound up will therefore operate in accordance with the law.

For those companies using bespoke articles of association, or for those unsure about what needs to be included in your prescribed particulars, you should seek professional legal advice.

Rejection of your prescribed particulars

Companies House will reject your prescribed particulars should you forget to complete them or you send your submission with this section blank. They will also reject them if the information is incomplete, or the information you supply points to a different document for more detail. For example, you cannot state something like ‘Please see the Articles of Association for the Rights’, or ‘Share rights are the same as others’.

It is your responsibility to ensure that the prescribed particulars match up to the rights detailed within the articles of association. Companies House will not always check for this, however it may be brought to their attention should someone who needs to know this information lodges a complaint against you.

When do Companies House need my prescribed particulars?

You must submit your prescribed particulars to Companies House on the creation of a new share class, or if you make changes to the rights of an existing share class. You will also need to submit these under the following events:

• An allotment of shares

• If share capital if re-denominated

• If shares are cancelled after the company purchases its own shares

• When an unlimited company is converted to a limited company

• When redeemable shares are redeemed

• When shares are consolidated or sub-divided

• When the company’s share capital is reduced

Companies House will hold the last updated copies of prescribed particulars submitted by a company. You should update Companies House with any changes made, and include these for each class of share in a confirmation statement if they haven’t already been reported.

Article by

Michelle