49 Consideration in relation to issue of options and convertible financial products

(1)

Before the board of a company issues any financial products that are convertible into shares in the company or any options to acquire shares in the company, the board must—

(a)

decide the consideration for which the convertible financial products or options, and, in either case, the shares will be issued and the terms on which they will be issued; and

(b)

if the shares are to be issued other than for cash, determine the reasonable present cash value of the consideration for the issue; and

(c)

resolve that, in its opinion, the consideration for and terms of the issue of the convertible financial products or options, and, in either case, the shares are fair and reasonable to the company and to all existing shareholders; and

(d)

if the shares are to be issued other than for cash, resolve that, in its opinion, the present cash value of the consideration to be provided is not less than the amount to be credited for the issue of the shares.

(2)

The directors who vote in favour of a resolution required by subsection (1) must sign a certificate—

(a)

stating the consideration for, and the terms of, the issue of the convertible financial products or options, and, in either case, the shares; and

(b)

describing the consideration in sufficient detail to identify it; and

(c)

where a present cash value has been determined in accordance with subsection (1)(b), stating that value and the basis for assessing it; and

(d)

stating that, in their opinion, the consideration for and terms of issue of the convertible financial products or options, and, in either case, the shares are fair and reasonable to the company and to all existing shareholders; and

(e)

if the shares are to be issued other than for cash, stating that, in their opinion, the present cash value of the consideration to be provided is not less than the amount to be credited for the issue of the shares.

(3)

The board must deliver a copy of a certificate that complies with subsection (2) to the Registrar for registration within 10 working days after it is given.

(4)

For the purposes of this section, shares that are to be credited as paid up, whether wholly or partly, as part of an arrangement that involves the transfer of property or the provision of services and an exchange of cash or cheques or other negotiable instruments, whether simultaneously or not, must be treated as paid up other than in cash to the value of the property or services.

(5)

A director who fails to comply with subsection (2) commits an offence and is liable on conviction to the penalty set out in section 373(1).

(6)

If the board of a company fails to comply with subsection (3), every director of the company commits an offence and is liable on conviction to the penalty set out in section 374(2).

Section 49 heading: amended, on 1 December 2014, by section 150 of the Financial Markets (Repeals and Amendments) Act 2013 (2013 No 70).

Section 49(1): amended, on 1 December 2014, by section 150 of the Financial Markets (Repeals and Amendments) Act 2013 (2013 No 70).

Section 49(1)(a): amended, on 1 December 2014, by section 150 of the Financial Markets (Repeals and Amendments) Act 2013 (2013 No 70).

Section 49(1)(c): amended, on 1 December 2014, by section 150 of the Financial Markets (Repeals and Amendments) Act 2013 (2013 No 70).

Section 49(2)(a): amended, on 1 December 2014, by section 150 of the Financial Markets (Repeals and Amendments) Act 2013 (2013 No 70).

Section 49(2)(d): amended, on 1 December 2014, by section 150 of the Financial Markets (Repeals and Amendments) Act 2013 (2013 No 70).