Companies Act 2014 section 1359

Supplemental provisions in relation to section 1358

Section 1359 sets out the consequences when shares in a PLC are allotted in breach of the minimum subscription requirements, or when the conditions for a valid share offer are not met within the required timeframe, including the obligation to refund applicants and the potential personal liability of directors.

• All money received from share applicants must be repaid immediately and without interest if shares were allotted in breach of minimum subscription rules, or if the required conditions were not met within 40 days of the prospectus being issued.
• If the money is not repaid promptly — specifically within 48 days of the prospectus being issued (where the 40-day condition applies) — the directors become jointly and severally liable to repay it with interest at the appropriate rate.
• A director can avoid this personal liability by proving that the failure to repay was not due to any misconduct or negligence on their part.
• Where shares were offered as wholly or partly payable other than in cash, the same rules apply, but references to repaying money extend to returning any other consideration received or, if that is not practicable, paying the equivalent cash value.