Nil paid shares and partly paid shares—practical considerations

Published by a ��Ƶ Share Incentives expert

Practice notes

Nil paid shares and partly paid shares—practical considerations

Published by a ��Ƶ Share Incentives expert

Practice notes

This Practice Note considers what nil paid shares and partly paid shares (PPS) are and the circumstances in which a company is most likely to use them as part of its share incentive arrangements. It also looks at the practical considerations which are relevant when they are implemented.

What are nil paid shares and partly paid shares?

When shares are issued, their subscription price is normally paid in full at that time. Nil paid and partly paid shares (PPS) operate instead so that at the time the shares are issued, either all of the subscription price or a part of it remains initially unpaid. The balance remains outstanding and is not payable until a later date, when the company calls for it to be paid. The difference between nil paid and PPS is that:

•
PPS are where a part of the subscription price is paid at the time that the shares are issued, and
•
nil paid shares are where none of the subscription price is paid at the time that the shares are issued

Jurisdiction(s):

United Kingdom

Key definition:

Nil paid definition

What does Nil paid mean?

Shares whose nominal value has not been paid up and where there is therefore a call due on the balance. Government stocks are sometimes issued in this way, with one or more calls at specified dates.

��Ƶ