11.3 THE LEGAL NATURE OF SHARES
S 35 deals with the legal nature of company shares and requirements to have shareholders.
· Shares are movable property and transferable.
· All shares (new company) must have no par value.
· All shares in a pre-existing company may be par value, and is allowed
· A company cannot issue shares to itself.
· Authorised shares have no rights until they are issued.
· Shares re-acquired or bought back have the same rights as authorised shares.
· Shares in a pre-existing company have exactly the same rights as they had before the effective date.
S 36 deals with all the classes of shares, the rights, and the limitations etc. All of these must be set out in the MOI. The MOI should dictate what the directors are allowed to do or what they cannot do, and of course the MOI can only be changed by special resolution.
For example, if the MOI allows, the directors may increase or decrease the number of authorized shares of any class, reclassify or classify any shares. They may determine the preference rights limitations or other terms of shares in any class that are not issued.