- Incorporation
- Constitution (Memorandum & Articles of Association)
- Shares and no par value regime
- Annual returns and financial reporting
- Execution of documents
- Accounts, audit, annual general meetings
- Boardroom excellence
- Meetings and decision making
- Enforcement data and transitional issues
Part 3 - Shares and no par value regime
Question 1. What is the rationale for migration to the new par value regime?
Answer: Nominal or par value is only applicable at the point of issuance of shares. The actual value of shares in a company varies in accordance with the current situation faced by the company;
The issued price of shares will be determined by the current value of the company, factors affecting the business of the company and the capital that the company is seeking to raise;
The nominal value, per se, does not accord protection to the shareholders. Instead the rights of shareholders are attached to the shares, which are the right to attend, speak and vote at meetings of shareholders and the right to receive dividends; and
The rights of shareholders depend on the number of shares held and not the value of shares when it was first purchased.
Question 2. In a no par value regime, how would the Board of Directors determine the pricing for issuance of shares?
Answer: In an ordinary corporate scenario, a company allots new shares in order to raise additional capital to fund its business operations;
The valuation method to determine the share price would vary between companies. One way could be based on the financial performance of the company. Using the financial statements as the guide, the Board may perform a quantitative analysis to determine a proportionate share pricing. At the same time, there are also some qualitative analysis that a company may want to use. The prospects, the risks associated with the company, issue of control etc.
In determining the share pricing, the Board must also consider all issues and act in the best interest of the company.
Source: SSM
