Renominalisation may be effected by ordinary resolution of the shareholders in general meeting or by written resolution if the Articles of Association so permit. Renominalisation could therefore result in an increase or a decrease in the issued share capital. If it results in a decrease, then the relevant resolution must be a special resolution.

It must be remembered that any such adjustment must not reduce the nominal value of any share to zero.

Renominalisation resulting in increased capital.
In cases where renominalisation would result in an increase in share capital, an ordinary resolution must be passed by the shareholders (or classes of shareholders).

Example

Company ABC Limited
Authorised and issued share capital following redenomination, is expressed as €1,206,251.10 divided into 950,000 Ordinary Shares of €1.269738 each.

Firstly, one might consider adjusting the value of each share upwards to, say, €2. However, this is only possible if there are sufficient profits available for distribution or additional capital is introduced to cover the increase in issued share capital.

If one were to effect renominalisation by employing distributable reserves the following would apply:

- Nominal Value of each share - €1.269738
- Adjustment to even value by way of increase - €2
- Difference per share - €0.730262
- Difference per 950,00 issued shares - €693,748.90
- Distributable reserves to be reduced by - €693,748.90
- Issued share capital to be increased by - €693,748.90
- Adjusted authorised share capital - €1,900,000
- Adjusted issued share capital - €1,900,000

In this instance the following will be filed in the Companies Registration Office (C.R.O.):

- Copy ordinary resolution
- Amended Memorandum and Articles of Association
- Notice of increase in nominal share capital (C.R.O. form B4)

Renominalisation resulting in decreased capital.
In cases where renominalisation would result in a decrease in share capital, a special resolution of the shareholders is required. This resolution must provide that an amount equal to the decrease will be paid into a fund. This fund is to be known as the capital conversion reserve fund. The amount transferred must not represent more than 10% of the pre-reduction share capital. A copy of the resolution must be sent to the Registrar within 15 days of the passing of the resolution along with a copy of the amended text of the Memorandum and Articles of Association together with registration fees.

Capital Conversion Reserve Fund.
Any reduction in the Capital Conversion Reserve Fund would be deemed a decrease in Share Capital and Section 72 of the Companies Act 1963 would then apply. Under Section 26 of the Act the fund may be applied by the company concerned in paying up unissued shares of that company (other than redeemable shares) to be allotted to shareholders of the company as fully paid up bonus shares.

THE DEADLINE FOR RENOMINALISATION IS 30th JUNE 2003*.
(* Under the Economic & Monetary Union Act, 1998)

This commentary on certain provisions of the legislation is not intended to be a legal or comprehensive interpretation. Professional advice should be sought in specific circumstances. For further information on statutory requirements, or any provision of the Companies Acts, 1963 to 1999, please contact our Company Secretarial Department.