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a) Minimum capital The Group has reached the conclusion that the only function of the minimum capital requirement is to deter individuals from lightheartedly starting a public limited company. We are not convinced that minimum capital, at its present levels, performs any other useful functions, but there is no evidence that it constitutes a hurdle to business activity either. It is probably wise not to spend much time on minimum capital in a reform to make the current system more efficient, and to direct attention to issues which are more relevant. The minimum capital requirement should not be removed, nor increased.
Minimum capital serves only one function But is not seen to be a significant hurdle Requirement should not be removed, nor increased
b) No par value shares Wide demand for no par value shares is being expressed by the financial industry and the legal professions. Not only the SLIM group favoured the introduction of no par value shares, but also the Giovannini Group in its report on The Impact of the Introduction of the Euro on Capital Markets25.
The introduction of no par value shares is widely demanded
Offering the possibility to have no par value shares does not necessarily require major changes in the system. The Second Company Law Directive already allows for shares to have a fractional value (also referred to as “accountable par”) rather than a nominal value (see for example Article 8 providing that shares cannot be issued below their nominal or fractional value). Shares would have to express numerically the fraction of the capital of the company that they represent or, alternatively, the total number of shares outstanding. In a system in which shares are dematerialised, the updating of the percentage or of the total number of shares should be relatively easy: there should be continuous disclosure of all shares outstanding, and, at the very least, companies should be required to update the fraction any time that there are relevant changes to it. As for “paper” shares, they would have to include the appropriate fraction or the total number of shares, together with the date in which the fraction or the total number of shares was correct, and a reminder that the correct fraction can be obtained at any time from the company itself, or from the companies Register.
The Second Directive already allows for shares to have a fractional value rather than a nominal value
Shares with fractional value require proper and continuous disclosure of relevant figures Whether or not the shares are dematerialised
It is debatable whether introducing shares without any reference to It is debatable either nominal or fractional value would constitute a significant whether shares without any
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See paragraph 2.2.2, letter D.