Difference in Shareholder transaction types

Hi, I’m hoping someone could shed some light in regards to the differences between the options for shareholder transactions - allotments, subscriptions and shareholders’ balances. We have recently migrated to CAS360 from a previous software which only had one option when it came to share issues etc.
Where my confusion particularly comes from is that they all ask for the exact same information when inputting data just the heading at the top of the screen changes.

thanks in advance!

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Hey again :slight_smile:

It’s my understanding that the differences are as below:

  • Allotments - Most common share allocation transaction you’d probably process for new shareholders, or existing shareholders acquiring new shares (outside of transfers, etc.)

  • Subscriptions - It’s my understanding (and I could be wrong here), that a Share Subscription transaction most often relates to capital raising / attracting investors for a business, often involving a Share Subscription Agreement. - This is likely shown in CAS as a separate transaction for clean & tidy record keeping in the Register of Members so that you can keep track of which shareholder came in to the company on a direct allotment or whether they were an investor/were offered an amount of shares that were to be paid by a particular date (again, if pitching for capital, etc.)

  • Shareholders’ Balances - These specific certificates are often issued in instances where a shareholder transfers/redeems/or otherwise disposes of some of their shareholdings, and so a Balance Certificate is issued to illustrate their balance after the transaction is complete.
    Also, if you import a company from ASIC’s register using an RA71, you’ll see the Shareholders are imported with only one transaction each and as a “Balance” transaction - and this is because ASIC doesn’t track the shareholding history of companies (hence why keeping an accurate Register of Members for our clients is of paramount importance)

I do so hope that this is correct, however @WarrenRenden / @Jeremy_H if you could please confirm if the above is correct I’d appreciate it.

Cheers,
Laneth

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Thanks @Laneth and @MelissaI

For the 3 different transaction types the general rule of thumb is

  • Subscriptions - Only used for the initial shareholders on incorporation
  • Allotments - Used for all new share issues post incorporation

Both of these transactions are transactions that will allow you to see the full history of the company as the shareholders change. In CAS360 we treat these transactions as the same, and usually you wont have any issues (unless you encounter someone who is picky :slight_smile: )

  • Shareholder Balance - This is a total amount of shares held, and should really only be used when you don’t have access to the ‘transactional’ history of the company, and it may not give a full history of the company. Of course ASIC don’t give the full history, they only provide a balance, so it has to be added as a Shareholder Balance transaction.

Hope this helps

Warren

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Thanks for the clarification mate, appreciated.

Would you say that the scenario I supplied with regards to raising capital would be a legitimate use for the Subscription transaction within the context of keeping the Member’s Register up-to-date, or are Subscription transactions really only an internal differentiation that BGL has implemented to highlight initial shareholders from later allottees/transfers-in?