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Understanding Shares

Shares is a standard negotiable instrument when it comes to company management. Shares may be issued or bought, and when this happens, it must be recorded in a register. This register is known as a “Share register”. The shares register consists of information on each member of a company and the number of shares assigned to each person. The information provided on each individual in the register includes name and current address of such person; the date the person’s name entered in the record and the number of shares they are allotted.

The register provides other information on shares that include the date it was allotted; the number of shares allotted; the type or classes of shares allocated; number assigned to each claim. It must then indicate whether the shares are paid partially or fully.

Shares can hold shares beneficially or non-beneficially. It is beneficially if the benefits go directly to the beneficiary of a trust. In contrast, the stakes are non-beneficially, when received by an agent or trustee on behalf of the beneficiary.

ASIC Rules and Regulations

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In respect of each member holding shares in a company, ASIC expects the following to be done:

Companies must submit details change:

Often, these changes are due to one or more of factors named above among others.

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Issuing Shares

There are different classes of shares that a company can issue. Each type is distinct by the rights and privileges attached to them as well as restrictions. The standard classification is one titled “A class”; “B class”. Others include Shares LG (Life Governor’s), EMP (Employee’s), SPE(Special), CUMP (Cumulative Preference), REDP (Redeemable Preference), NCP (Non-cumulative preference), ORD(Ordinary), MAN (Management) and PARP (Participative Preference) among others.

Shares may also be classified further as:

This share is not paid for, and it does not increase the share capital of the company.

As the name suggests, it gives preferential treatments to members who are allotted the shares.

This class of shares is preferential but redeemable at the company's request or a member or after particular time expiration.

The structure of notification sent to ASIC depends on whether the company is proprietary or public. Proprietary Companies are companies held which may either be limited or unlimited but are restricted. In contrast, Public companies are listed publicly and trade without restrictions on a stock exchange.

In the case of proprietary companies, a completed share structure revealing details about the share's acquisition is sent to ASIC within 28 days. The negotiable instrument may pay in full or half. However, a public company may only fill in the change of company details.

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