UK: England and Wales: Court of Appeal confirms that shares were not alloted at a discount

Section 580(1) of the Companies Act 2006 provides that "[a] company's shares must not be allotted at a discount". Last Friday, in Chalcot Training Ltd v Ralph [2021] EWCA Civ 795, the Court of Appeal unanimously upheld the trial judge's decision (at [2020] EWHC 1054 (Ch)), that shares issued as part of a tax avoidance scheme had not been issued in contravention of section 580.  In what is - I believe - the first appellate decision to consider section 580, Lewison LJ (with whom Arnold and Edis LJJ agreed) observed (paras. [43], [50] and [73]):

The idea behind the limited liability company is that people will be encouraged to be associated in a business enterprise if they are able to limit their personal liability for the debts of the enterprise. The way in which this is achieved is by the creation of a corporation with limited liability. What that means is that the personal liability of the members of the company is limited to the amount that they have subscribed or agreed to subscribe to the capital of the company. The capital in this instance is the company's nominal share capital. It is part of the very definition of a limited company in section 3 of the Companies Act 2006. That provides that a company is a company limited by shares if the liability of its members "is limited to the amount, if any, unpaid on the shares held by them." This fundamental feature of corporate liability has been recognised for a very long time. It was introduced by the Joint Stock Companies Act 1856; and repeated in the Companies Act 1862". 

"The prohibition on issuing shares at a discount to nominal value thus long pre-dated section 580. Although it was described as a "common law" prohibition, it is, I think, more accurately described as inevitably flowing from the statutory machinery for the creation of a limited liability corporation".

".... the mischief against which section 580 is directed (as confirmed by all the cases that we have been shown) is the depletion of the company's nominal share capital".