Companies Act 2014 section 1025

Subscription of share capital

Section 1025 prohibits a public limited company from accepting promises of work or services as payment for its shares or any share premium, and sets out the financial consequences and liabilities that arise if this rule is broken.

• A PLC must never accept an undertaking to perform work or services as payment for its shares or any premium on those shares.
• If a PLC does accept such an undertaking, the shareholder must pay the company the nominal value of the shares plus any premium (or the relevant proportion treated as paid up by the undertaking), together with interest at the appropriate rate.
• A subsequent holder of the affected shares is jointly and severally liable for the same amount, unless they purchased the shares for value without actual knowledge of the breach, or derived their title from someone who was not liable.
• Both the PLC and any officer in default commit a category 3 offence if this section is contravened.