Teifi Valley Railway

When the limited Company was set up, the total share capital was set at £100,000. This was the maximum number of shares that could be issued, and represented a best guess at what it would cost to start up the railway from nothing. After years of fundraising by volunteers, the property was purchased and a licenced railway built. The volunteers were formalised into the Railway Society and this was rewarded for its efforts by transfer of shares to the same value as it had raised. A few individuals bought shares as well, but it was always clear that the Society was going to be the majority shareholder. Since all the directors were Society members, everybody worked together with the same plan to develop the railway. EU grants opened up a new phase of the business and it qualified as a "social enterprise", which meant that no dividends would ever be paid to shareholders, any profits being retained by the Company. This meant that all shares held by individuals in effect became donations. They cannot be inherited, sold or given away. I was discussing the future treatment of the shares of dead or untraceable shareholders with the Auditors in 2014 when the new management insisted that they would take over the Accounts. The fact that the Society is the majority shareholder means that the Society owns the railway Company. The new management believe that this means the Society owns the Railway. It does not. The Company owns the land and buildings and holds the LRO or licence to run a railway carrying passengers.

 

Interesting bit of history there, thank you. It seems a shame that the society can't encourage the company to be a bit more open and forthcoming with plans etc.

With regard to the share ownership... This is the first time I have ever heard of shares being non transferrable in any way not even inherited or gifted. Does that make some of the shareholdings listed as eg. "On behalf of the family ....." or similar are a little bit questionable as they are not allocated to an individual and in the event of deaths of the senior family members they are effectively being transferred to the junior members without the need for any notification simply because they are still 'in the family'? I also need to ask then, What happens to the shares if the shareholder dies? Do the shares simply become invalid with no listed owner and, if so, how should this be shown on the annual returns I wonder? Does this affect the number of votes required if, for example, a motion requires, say, 75% of the shareholders approval? Would that be all shares or just 'currently held' ones? Sounds like a can of worms to me.
There was also a belief/story/rumour a few years ago that the society shareholding was listed as property of an individual who was on the society committee (I can't remember any reason why being given) who then passed away and there was some hoo-ha about who should get the shares, the society or the company with the company finally being told that it was illegal for them to own share in themselves or something. If true how would that have worked out then if the shares had become invalid then?
Oh dear, perhaps I shouldn't post this... but I will anyway because I'm genuinely interested... Sorry

 

About the shares. in general terms, if the shares are "Withdrawable" then they are not normally transferable, unless a member dies, in which case their shares are transferred as part of the member’s estate. The only way you can rid yourself of the shares is to withdraw the capital, subject to the rules of the society. If the shares are not classed as "withdrawable" then they can be sold or transferred as you wish, although as they are valueless. finding a purchaser might be tricky. a friend of mine used to say that these shares were little more than expensive wallpaper.
When voting, the usual criteria is a specified percentage (or majority) of the votes cast, not of the total shareholding.
Ian C

 

These complications were why I was trying to discuss the shares situation with the auditors, who would have had more legal experience than me. The current list has just left gaps or said "held in trust" etc. which doesn't make much sense. My guess at the time was that the shares of a dead shareholder reverted to the Company so that they were no longer "in issue" and this would show up in the Accounts. The current manager has no time for paperwork or planning. There is no need for it since he is in charge!

 

That's something else I've learned on here... I've never heard of that type of share.

I'm not sure how anyone could manage shares reverting to the company like this. ( Note on the certificate? "Will all deceased shareholders please ensure that their share certificates are returned to the railway." ) If some were returned would the number of issued shares go down and the 'Unpaid' share total go up? But then how would you account for the cash that originally paid for the shares, which is still in the business, but is now not allocated to any income stream? Oh boy, I'm glad I'm not an accountant having to sort that out.

 

Well as I said earlier, shares of dead shareholders do NOT revert to the company. They remain as part of the dead persons estate and dealt with accordingly. The problem is that the executors probably will not know about the shares and if they don't find certificates then the shares just drift into limbo. All share registrars have such shares where the shareholder is not contactactable.

 

Which makes sense. But there was an assertion that there is a class of share which can be purchased but otherwise not transferred in any way. That seems very odd as a class of share, the definition of which is a stake in the ownership of a company, and hence a form of property.

If it were actually a form of loan, complete with lifetime rights as if a shareholder, I’d find it more comprehensible.


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Reference to the Company Articles on the Companies House website indicates that in September 2004 the articles based on the Schedule to the Companies (Tables A to F) Regulations 1985 were amended to include clauses to the effect that no income could be distributed to the members and in the event of winding up no surplus could be returned to the members but any surplus would have to pass to a body with similar aims or a charitable body. These are the clauses which render the shares financially worthless and are fairly standard clauses required by grant funders but do not remove the holder's voting rights.

As the Companies House on line system does not show previous Articles and share details it is unclear whether these included the sort of clauses often seen in small companies where share trading could only take place with the agreement of the Company. Interested readers are advised to refer to the 1985 regulations https://www.legislation.gov.uk/uksi/1985/805/pdfs/uksi_19850805_en.pdf or contact Companies House for access to the relevant documents.

 

I think that was a very interesting thread drift. Thanks to one and all for your input.

Now, to get this back thread 'on track' (sorry) I see their Santa running dates are up on their website and FB page but no timetables yet.

 

Depressingly the Society admin haven't yet bothered to send in the annual reports to the Charity Commission and these are 3 weeks overdue.

 

I don't know just how many time Companies House will let them get away with that, before they say enough is enough time to close down.

 

Many many times I should think.

 

I would have though that the late fees alone would have made some difference to them. I am not sure what the rates of charges are applicable this day and age

Late filing penalty fees
The penalty only applies to accounts. The level of the penalty depends on how late the accounts reach Companies House.

Length of period (measured from the date the accounts are due) Penalty for a private company or LLP Penalty for a public company
Not more than 1 month £150 £750
More than 1 month but not more than 3 months £375 £1,500
More than 3 months but not more than 6 months £750 £3,000
More than 6 months £1,500 £7,500
The penalty will be doubled if accounts are filed late in 2 successive financial years (beginning on or after 6 April 2008).

 

Post #890 concerns reports to the Charity Commission, not those to Companies House.

 

Does anyone know what the consequences are for late submission of reports to the Charity Commission?

 

Probably a slap on the wrist, given that the trustees of Christ Church, Oxford, in their campaign against the Dean, hid £6.6m in legal fees in their "teaching account" ... and have received an official warning (Source: Private Eye, current issue; also reported widely in other papers)

 

What really mystifies me is the cafe at the railway. No Accounts sent in since 2019 when Mrs Cox managed to remember what happened in 2017. I have asked Companies House again and again why they have not closed down the Company, but no explanation has ever emerged. Looking again at the CH explanation of directors' responsibilities, they insist "you may be fined, prosecuted or disqualified from being a director if you do not meet your responsibilities" and points out that you can hire an accountant but "you are still legally responsible for your company's records, accounts and performance." That's crystal clear isn't it? So how do they get away with it?

 

You may want to read Private Eye on the weaknesses of Company's House. The word "may" also implies a lot of uncertainty about the possible consequences.

Meanwhile, elsewhere, the Charities Commission has made some vaguely disobliging findings in a report about Christ Church College, Oxford, whose trustees obscured £6.6m of expenditure in a highly contentious (and utterly failed) set of cases against the former Dean. If that is a regulator's action in a matter that has been aired in Parliament and dragged through the press, how likely is it that the sledgehammer will be used to crack the nut of the TVR?

 

I'm afraid that Companies House and the Charity Commission are far, far too busy chasing down large funds being syphoned off to terrorist groups and to groups not fulfiling the current diversity fads to be concerned about a tiny little cafe in remote west Wales.

 

I do hope they are chasing terrorist funding. Somehow I suspect that the real issue is that they've just not got enough people to do the job. Every part of the state has this issue.