41. Shareholders

(1) The Incorporators of a Company are taken to have agreed to become Shareholders of the Company and, on the registration of the Company, must be entered as Shareholders in the Company’s Register of Shareholders.

(2) A Person other than an Incorporator may become a Shareholder in the Company by:

• (a) agreeing to become a Shareholder in the Company; and
• (b) acquiring a Share in the Company; and
• (c) having the Person’s name entered in the Company’s Register of Shareholders.

42. Nature of Shares

(1) Subject to the Articles of Association and the terms of their issue, each Share must:

• (a) give the right to vote at a meeting of the Company; and
• (b) represent a proportionate interest in the Company; and
• (c) rank, if fully Paid-up, in all respects equally with each other Share of the same class of Shares in the Company.

(2) Subject to section 54 (Transfer and registration of Shares and Debt Securities), the Shares or other interests of a Shareholder of a Company are transferable in the way provided in its Articles of Association.

(3) A Company may create different classes of Shares to the extent permitted by its Articles of Association.

43. Minimum share capital

(1) Each Share in a Company must have a fixed nominal value. A Share may not be allotted by a Company at less than its nominal value. An Allotment of a Share that does not have a fixed nominal value, or is Allotted at less than its nominal value, is void.

(2) A Private Company must have no minimum share capital.

(3) A Public Company:

1. (a) must have an allotted share capital (excluding treasury Shares) of no less than U.S. $100,000 at any time; and
2. (b) must not allot a Share except as Paid-up at least as to 1/4 of its nominal value.

(4) Subsection (3)(b) does not apply to Shares allotted under an Employee Share Scheme.

44. Alteration of share capital

(1) A Company may, by Resolution, alter its share capital, unless the alteration is prohibited by its Articles of Association or results in the Company not having the share capital required by section 43 (Minimum share capital).

(2) A Company may:

1. (a) increase its share capital by creating new Shares of an existing class with the same nominal value, or a new class of Shares of the nominal value it considers appropriate; or
2. (b) consolidate and divide its share capital (whether allotted or not) into Shares representing a larger nominal value than their existing nominal value; or
3. (c) subdivide its Shares, or any of them, into Shares representing a smaller nominal value than their existing nominal value, if the proportion between the amount paid and the amount unpaid (if any) on each subdivided Share is the same as it was for the Share from which the sub-divided Share was derived.

(3) A Company must not alter its share capital:

1. (a) otherwise than by Resolution or decision of the board of Directors subject to subsection (5) below; or
2. (b) if the alteration, or any alteration of its share capital, is prohibited by its Articles of Association; or
3. (c) if the alteration would result in the Company not having the share capital required by section 43 (Minimum share capital).

(4) Contravention of subsection (3) is punishable by a fine

(5) Subject to section 48 (Shareholders’ pre-emption rights), the board of Directors of a Company may, if authorised by the Articles of Association or Resolution, exercise a power of the Company:

1. (a) to allot and issue Shares; or
2. (b) to grant rights to subscribe for or convert any Securities into Shares.

45. Non-cash consideration for Shares in Private Company

(1) A Private Company must not, except as provided under subsection (2), allot Shares as Paid-up (in part or in full) other than for cash consideration.

(2) If a Private Company allots Shares for consideration other than cash, the board of Directors of the Company must:

1. (a) determine the reasonable cash value of the consideration for the Shares; and
2. (b) resolve that, in its opinion, the consideration for the Shares is fair and reasonable to the Company and to all existing Shareholders; and
3. (c) resolve that, in its opinion, the present cash value of the consideration to be provided for the Shares is not less than the nominal value to be credited for the issue of the Shares; and
4. (d) submit a copy of the relevant resolutions to the Registrar along with the notice of the Allotment.

(3) The resolutions required under subsection (2) must describe the consideration in sufficient detail and the present cash value of the consideration, as determined by the board of Directors, and the basis of the board’s valuation.

(4) This section does not apply to:

1. (a) the Allotment of Shares in a Company on the conversion of any convertible Securities; or
2. (b) the exercise of an option to acquire Shares in a Company; or
3. (c) the Allotment of Shares that are fully Paid-up from the reserves of a Company to all Shareholders in proportion to the number of Shares held by each Shareholder; or
4. (d) the consolidation and division, or subdivision, of Shares, or any class of Shares, in a Company in accordance with section 44(2)(b) (Alternation of share capital).

46. Non-cash consideration for Shares in Public Company

(1) A Public Company must not allot Shares as Paid-up (in part or in full) cash unless:

1. (a) the Company has obtained an independent valuation of the consideration in accordance with this section not earlier than 6 months before it allots the Shares; and
2. (b) a copy of the valuation report has been given to the proposed allottee; and
3. (c) copies of the valuation report and the relevant resolutions of the board of Directors have been given to the Registrar along with the notice of the Allotment

(2) A Public Company must not accept, in part or full payment for its Shares or any premium on them, an undertaking given by a Person that the Person or another Person is to undertake work or provide services for the Company or any other Person, unless the work is to be undertaken or the services provided within 5 years after the date of Allotment of the Shares.

(3) Subsections (1) and (2) do not apply to:

1. (a) the Allotment of Shares in a Company in connection with a Share exchange; or
2. (b) the Allotment of Shares in a Company in connection with a proposed merger with another Body Corporate; or
3. (c) the Allotment of Shares in a Company on the conversion of any convertible Securities; or
4. (d) the exercise of an option to acquire Shares in a Company; or
5. (e) the Allotment of Shares that are fully Paid-up from the reserves of a Company to all Shareholders in proportion to the number of Shares held by each Shareholder; or
6. (f) the consolidation and division, or subdivision, of Shares, or any class of Shares, in a Company in proportion to the Shares or the Shares in that class.

(4) A valuation report required under subsection (1) must be made by a Person registered as an auditor under these Regulations who is not:

1. (a) an Employee of the Company; or
2. (b) a partner, officer or employee of an Employee of the Company or of a partnership in which an Employee of the Company is a partner; or
3. (c) an officer or employee of an associated undertaking of the Company; or
4. (d) a partner, officer or employee of an associated undertaking of the Company or of a partnership in which an associated undertaking of the Company is a partner; or
5. (e) connected with the Company in a way prescribed under the Rules.

(5) The Person conducting the valuation (the valuer) may request an Employee of the Company to provide the information and explanation that the valuer considers necessary for the valuation. The Employee must comply with the request or take reasonable steps to ensure that the request is complied with.

(6) A Person must not:

1. (a) make a statement, or give information, to the valuer (whether orally, in a Document or in any other way) that is false or misleading in a material particular; or
2. (b) give a Document to the valuer that is false or misleading in a material particular; or
3. (c) conceal information if the concealment is likely to mislead or deceive the valuer.

(7) Contravention of subsection (5) or (6) is punishable by a fine.

(8) For this section:

1. (a) an Allotment is in connection with a Share exchange if the consideration for the Allotment is the transfer of Shares in another Body Corporate or the cancellation of Shares in another Body Corporate, and the Allotment is open to all holders (or all of a particular class of holders) of Shares in the other Body Corporate; and
2. (b) an Allotment is in connection with a proposed merger of a Company with another Body Corporate, if the Company proposes to acquire all the assets and Liabilities of the other Body Corporate in exchange for the issue of its Shares or other Securities to the shareholders or members of the other Body Corporate.

47. Bearer Shares

It is unlawful for a Company to issue bearer Shares. Any Shares issued by a Company that purport to be bearer Shares are void.

48. Shareholders’ pre-emption rights

(1) Subject to section 49 (Exceptions of pre-emption right), a Company must not allot Equity Securities to a Person on any terms unless:

1. (a) it has made an offer to each Person who holds Equity Securities to allot to the Person, on the same or more favourable terms, a proportion of the Equity Securities that is as nearly as practicable equal to the proportion of the Equity Securities held by the Person in the Company’s share capital; and
2. (b) the period during which any offer may be accepted has expired or the Company has received notice of the acceptance or refusal of every offer made.

(2) For purposes of subsection (1), the Company allots Equity Securities if it:

1. (a) grants a right to subscribe for, or to convert Securities into, Ordinary Shares; and
2. (b) sells Equity Securities in the Company that were held by the Company immediately before the sale as treasury Shares.

(3) Shares held by the Company as treasury Shares are disregarded for this section, so that the Company is not treated as a Person who holds Equity Securities and treasury Shares are not treated as forming part of the Company’s share capital.

(4) A Company’s Articles of Association may prohibit the Company from allotting Shares of a particular class in respect of an offer referred to in subsection (1)(a), unless the Company has complied with the equivalent pre-emption rights included in its Articles of Association. Subsection (1) does not apply in such circumstances and the Company may allot the Shares in accordance with those equivalent pre-emption rights, if an offer is made in accordance with subsection (5).

(5) An offer made under subsection (1)(a) or (4):

1. (a) may be made in hard copy or electronic form; and
2. (b) may, if a holder of Equity Securities has not given an address to the Company, be made by arranging for the offer, or a notice specifying where a copy of it can be obtained or inspected, to be published in the Appointed Publications; and
3. (c) must be open for acceptance for a period of not less than 14 days after the date:
4. (i) the offer is taken to have been received in accordance with the Articles of Association (or, if the Articles of Association do not contain such a provision, when the offer is reasonably expected to have been received by the offeree); or

(ii) the offer is published in the Appointed Publications.

(6) A Company does not contravene this section if:

1. (a) an offer has been made to holders of Equity Securities in accordance with this section; and
2. (b) the Company allots Equity Securities to:
3. (i) an existing holder of Equity Securities; or

(ii) a Person in whose favour an existing holder of Equity Securities has renounced right to the allotment.

(7) Contravention of this section is punishable by a fine.

49. Exceptions to pre-emption right

Section 48 (Shareholders’ pre-emption rights) does not apply in respect of an allotment of Equity Securities:

• (a) that are bonus Shares; or
• (b) that would be held under, or allotted or transferred under, an Employee Share Scheme; or
• (c) that are wholly or partly Paid-up otherwise than in cash in accordance with section 45 (Non-cash consideration for Shares in Private Company) or 46 (Non-cash consideration for Shares in Public Company); or
• (d) in a Private Company, to the extent that the Pre-emption right has been excluded or varied by its Articles of Association; or
• (e) by any Company, to the extent that the restrictions prescribed by section 48 (Shareholders’ pre-emption rights) have been excluded or varied by Special Resolution (unless a higher threshold is required by the Articles of Association), if the Special Resolution has been recommended by the Directors of the Company in a Written statement circulated to all Shareholders that sets out:

(i) the Directors’ reasons for making the recommendation; and

(ii) the amount to be paid to the Company in respect of allotment; and

(iii) the Directors’ justification of that amount.