CAPITAL AND SHARES

33

A company can only convert all or any of its paid-up
shares into stock, and reconvert that stock into shares of any
denomination, if it is authorised by its articles to do so.
Where the power is not so given, it is not necessary to have
the articles varied before the resolution for the conversion is
passed. A special resolution passed in the usual way will
suffice [Campbell's Case (1873), 9 Ch. App. 1]. The power
to convert and reconvert must be exercised by the company
in general meeting [s. 50(2)]. Notice of the conversion
of shares into stock must be given to the Registrar, as must
also notice of reconversions (s. 5I). - After conversion and
notice to the Registrar, all the provisions of the Act which
are applicable to shares only shall cease as to so much of
the capital as is converted into stock; and the register, and
the list of members to be forwarded to the Registrar, shall
show the amount of stock held by each member instead of
the number of shares [ss. 95 (1), 108 (2)]. Throughout the
Act, ‘share’ includes stock except where a distinction between
stock and share is expressed or implied (s. 380).

Stock differs from shares in this respect, ‘that shares are Stock.
not necessarily paid up.” ‘Shares are not necessarily con-
verted into stock as soon as they are paid up; they may
exist either as paid up, or as not paid up shares. But as
regards stock, that can only exist in the paid up state.’
‘Shares in a company, as shares, cannot be bought in small
fractions of any amount, fractions of less than a pound,
but the consolidated stock of a company can be bought just
in the same way as the stock of the public debt can be
bought, split up into as many portions as you like, and sub-
divided into as small fractions as you please. . . . Inde-
pendently of that, however, it possesses all the qualities of
shares. It is, in fact, simply a set of shares put together in
a bundle’ [per Lord Hatherley, in Morrice v. Aylmer (1875)
L.R. 7 H.L. 717, at pp. 724, 725).

Stock is ordinarily transferable in the same manner, as
shares, but sometimes a minimum amount of stock is fixed,
and fractions of £1 are not generally allowed to be dealt with.
Stockholders have the same rights as regards dividends
and voting as shareholders. Preference and other rights
in respect of shares are not affected by their conversion into
stock. Warrants to bearer may be issued in respect of
stock (see Chapter X).

Stock cannot be issued direct; shares must first be issued
and then, when fully paid, may be converted into stock.
But the direct issue of stock is an irregularity which after

Conversion
into Stock
and re-
conversion.