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Process for Excessive Shares in Company Incorporation Orders

Contents 1. Background 2. MLC Pass Orders 3. Paused Orders 4. Templates Background: Scammers often use unusually high-value initial share capitals to attract customers and investors by making companies seem bigger than they actually are. As a result, we need to be vigilant and challenge orders where appropriate.    MLC Pass Orders: Persons Responsible: Verginia and Sophia Check Share Quantity: During the final review stage for all MLC pass clients, verify the number of shares in the company structure. Flag Excessive Shares: If the number of shares or the total nominal value of the shares exceeds 10,000, mark the soft review as "fail" in the paused/rejected spreadsheet. Pause the order and send the relevant macro to the client Chase the client 3x as per the normal 'paused' process Paused Orders: Persons Responsible: Niviena, Andrew and Mathilda Check Share Quantity: During the soft review, verify the number of shares in the company structure. Flag Excessive Shares: If the number of shares or the total nominal value of the shares exceeds 10,000, mark the soft review as "fail" in the compliance spreadsheet. Add E-filing Note: Add a note to the company's e-filing account stating: "Shares exceed limit." Send Initial Email: Continue to send the customer their standard "IMPORTANT" email. Send Secondary Email (using macros): a) "Nominal Value > £10,000" macro: Use this if the total nominal value exceeds £10,000 (e.g., 1 share at £11,000). b) "Number of Shares > 10,000" macro: Use this if the total number of shares exceeds 10,000 (e.g., 11,000 shares at £0.01). c) "Nominal Value + Number of Shares > £10,000" macro: Use this if both the total number of shares and the nominal value are high (e.g., 50,000 shares at £50.00).   Templates: Total Nominal Value in excess of £10,000 Subject Line – [COMPANY NAME] – Your order requires attention   Dear [Customer Name], [COMPANY NAME] – Your order requires attention We are writing to inform you that your company formation order requires your attention. We are supervised by HMRC for anti-money laundering purposes. In connection with these obligations, as a matter of policy we cannot incorporate a company with an initial share capital of greater than £10,000 in total value. You have attempted to incorporate a company with a share capital in excess of this value. Why are we asking you to reduce your company’s share capital? Unusually high value initial share capitals are often used by scammers to attract customers and investors by making companies seem bigger than they actually are. As a result, we need to be vigilant and challenge orders where appropriate. For information, most companies, even those that take large equity investments, are incorporated with modest shareholding arrangements at the outset (1 ordinary share of £1.00 is very commonly used). Generally, these companies increase their share capital following incorporation, taking equity investments into the company’s bank account as the business grows.  To be clear, companies can issue further shares following incorporation - the initial share capital is not a limit. Next Steps You will need to amend the requested share capital for the incorporation to an amount lower than £10,000 in total. Please confirm the number and nominal value of shares each shareholder will have (if more than one shareholder). Should you not be willing to do this, we will be forced to cancel your order with us. We look forward to hearing from you in due course.     Total number of shares in excess of 10,000 Subject Line – [COMPANY NAME] – Your order requires attention   Dear [Customer Name], [COMPANY NAME] – Your order requires attention We are writing to inform you that your company formation order requires your attention. We are supervised by HMRC for anti-money laundering purposes. In connection with these obligations, as a matter of policy we cannot incorporate a company with an initial share capital with more than 10,000 shares. You have attempted to incorporate a company with a greater number of shares. Why are we asking you to reduce your company’s share capital? Unusually high numbers of shares in an initial share capital are often used by scammers to attract customers and investors by making companies seem bigger than they actually are. As a result, we need to be vigilant and challenge orders where appropriate. For information, most companies, even those that take large equity investments, are incorporated with modest shareholding arrangements at the outset (1 ordinary share of £1.00 is very commonly used). Generally, these companies increase their share capital following incorporation, taking equity investments into the company’s bank account as the business grows.  To be clear, companies can issue further shares following incorporation - the initial share capital is not a limit. Next Steps You will need to amend the requested share capital for the incorporation to a number of shares lower than 10,000 in total. Please confirm the number and nominal value of shares each shareholder will have (if more than one shareholder). Should you not be willing to do this, we will be forced to cancel your order with us. We look forward to hearing from you in due course.     High Nominal Value and high number of shares Subject Line – [COMPANY NAME] – Your order requires attention   Dear [Customer Name], [COMPANY NAME] – Your order requires attention We are writing to inform you that your company formation order requires your attention. We are supervised by HMRC for anti-money laundering purposes. In connection with these obligations, as a matter of policy we cannot incorporate a company either: with an initial share capital of greater than £10,000 in total value; or with an initial share capital of more than 10,000 shares You have attempted to incorporate a company with a share capital in excess of £10,000 and with a total number of shares greater than 10,000 shares. Why are we asking you to reduce your company’s share capital? Unusually high values or high numbers or shares in initial share capitals are often used by scammers to attract customers and investors by making companies seem bigger than they actually are. As a result, we need to be vigilant and challenge orders where appropriate. For information, most companies, even those that take large equity investments, are incorporated with modest shareholding arrangements at the outset (1 ordinary share of £1.00 is very commonly used). Generally, these companies increase their share capital following incorporation, taking equity investments into the company’s bank account as the business grows.  To be clear, companies can issue further shares following incorporation - the initial share capital is not a limit. Next Steps You will need to amend the requested share capital for the incorporation to:  an amount lower than £10,000 in total; and a number of shares lower than 10,000 in total. Please confirm the number and nominal value of shares each shareholder will have (if more than one shareholder). Should you not be willing to do this, we will be forced to cancel your order with us. We look forward to hearing from you in due course.