Reorganizing the Share Capital
Solving the £2.00 Problem

1.1 The £2.00 Problem

DM-XTech UK's present share capital, two ordinary shares of £1.00 each, is legally valid but commercially unusable for any serious capital-markets pathway. It does not provide the granularity needed to allocate equity among founders, the Philippine licensor (DM-XTechnologies Inc.), Series A investors, employee-incentive participants, or future SPAC and de-SPAC stakeholders.

The immediate problem is not the company's private-company status; it is the fact that its present share capital is too thin and inflexible. DM-XTech UK does not need to satisfy the PLC minimum allotted share-capital requirement of £50,000, nor does it need a PLC trading certificate. What it needs is a share structure with sufficient granularity to absorb dilution across multiple investor rounds, express relative ownership with precision, support an employee incentive pool, accommodate a licensor equity stake, and provide the mechanical infrastructure for a Series A and an eventual SPAC or de-SPAC transaction.

1.2 Step 1: Solving the £2.00 Problem through Share Subdivision

The first step is to solve the £2.00 Problem through a share subdivision under CA2006 s.618. The existing two £1.00 ordinary shares should be subdivided into a much larger number of low-nominal-value shares, for example 20,000 or 2,000,000 ordinary shares of £0.0001 each, depending on the intended capital plan. This does not change the company's economic value. It simply creates the equity granularity needed to allocate founder shares, DM-XTechPhil/licensor shares, Series A shares, option-pool shares, and SPAC consideration shares in meaningful and proportionate quantities.

Companies House Filing Requirements for Subdivision

• Pass the ordinary resolution at a board or general meeting.
• File Form SH02 (Notice of Sub-division of Shares) at Companies House within one month of the resolution. This form replaces the old Form 122.
• Update the company's statutory register of members and the register of share classes.
• Issue updated share certificates to all shareholders reflecting the new share numbers.

1.3 Step 2: Investor-Ready Articles and Shareholders' Agreement

Because DM-XTech UK will remain a private company, it does not need to satisfy the PLC minimum allotted share-capital requirement of £50,000, nor does it need a PLC trading certificate. That removes an unnecessary regulatory step. However, the company should still create a credible private-company capital base by issuing additional shares, adopting updated Articles of Association, and preparing a Shareholders' Agreement that clearly governs voting rights, pre-emption rights, reserved matters, liquidation preferences, and the economic relationship between founders, the licensor, and future Series A investors.

The new Articles should be drafted to institutional-investor standard: drag-along and tag-along rights for exit liquidity; anti-dilution provisions protecting investors against future down-rounds; board consent matters requiring approval from investor-appointed directors; information rights including quarterly and annual reporting obligations; and a standing pre-emption disapplication authority to enable future fundraises without convening a general meeting each time. A formal Shareholders' Agreement between founders, DM-XTechPhil, and (later) Series A investors is not optional. It governs the relationship between shareholders and is a prerequisite for any institutional investment conversation.

1.4 Step 3: Allocating Economic Ownership Before Valuation Crystallises

The next step is to determine how economic ownership should be allocated before the Series A valuation crystallises. Founder equity and DM-XTechPhil/licensor equity should be structured while the company remains asset-light and pre-valuation, so that later investor pricing does not create avoidable tax, accounting, or fairness issues.

If DM-XTechPhil contributes or licenses aviation technology, product rights, or commercial rights to DM-XTech UK, that transaction should be documented carefully and at arm's length. There is no statutory requirement under UK company law for an independent valuation when a private limited company allots shares for non-cash consideration (unlike a public company, where CA2006 s.593 imposes a mandatory independent valuation). However, an independent valuation is still strongly recommended for two reasons: first, institutional investors and their due diligence counsel will require credible, documented evidence of how the IP was valued at the time of allotment; and second, HMRC will apply UK transfer pricing rules to any below-market IP contribution and may challenge the transaction if it is not supported by an arm's-length benchmark. Commission a qualified independent valuer early; aviation IP specialists typically require 4 to 8 weeks.

1.5 Step 4: Equity Incentive Pool

The company should also create a dedicated equity incentive pool, typically in the range of 10% to 15% on a fully diluted basis, to attract a SPAC-ready CFO, senior management, technical leadership, and commercial executives without excessive cash burn. Most Series A investors will expect to see an unallocated option pool of this size on the cap table before they commit capital; a well-structured pool demonstrates that the company has planned for the talent it needs to deploy the investment.

Where restricted shares or growth shares are issued to UK-connected executives, the company should obtain UK tax advice and use timely Section 431 elections where appropriate. A s.431 election, made jointly by the employer company and the shareholder within 14 days of the share acquisition, elects to treat the shares as if any restrictions on them were disregarded for income tax purposes. This converts what would otherwise be an ongoing income tax charge as restrictions lift into a single upfront charge (typically negligible if shares are issued at nominal value while the company is pre-valuation). The objective is to avoid turning future share price appreciation into employment income rather than capital gain.

1.6 The Revised Roadmap

The restructuring roadmap for DM-XTech UK's share capital is therefore straightforward:

1. 1
   Subdivide the existing £2.00 share capital into a granular share base Pass an ordinary resolution under CA2006 s.618. File Form SH02 at Companies House within one month. Update the statutory registers and issue new certificates. This is the mechanical prerequisite for everything that follows.
2. 2
   Adopt investor-ready Articles of Association and execute a Shareholders' Agreement Redraft the Articles to include institutional investor provisions (drag-along, tag-along, anti-dilution, reserved matters, information rights, pre-emption disapplication). Execute a Shareholders' Agreement between founders and DM-XTechPhil before any Series A engagement. These two documents are the governance infrastructure investors review on day one of due diligence.
3. 3
   Allocate founder, parent-company, licensor, and incentive-pool equity before valuation crystallises Allot founder shares and DM-XTechPhil/licensor shares at pre-valuation prices. Reserve an option pool of 10% to 15% on a fully diluted basis. If DM-XTechPhil contributes IP or licence rights as non-cash consideration, commission an independent arm's-length valuation first. File Form SH01 at Companies House within one month of each allotment.
4. 4
   Execute the exclusive licence agreement between DM-XTechPhil and DM-XTech UK This agreement is the core commercial asset underpinning the £100 million Series A valuation. It must set out unambiguous exclusive territorial rights, a defined royalty or licence-fee structure, clear IP ownership and improvement rights, regulatory compliance obligations (EASA, CAA, ICAO), and governing law. It should be executed after equity is allotted at pre-valuation prices, not before, to avoid crystallising the company's value prematurely.
5. 5
   Prepare the company for Series A investment as a clean, private limited company With a properly structured cap table, investor-grade Articles, an executed Shareholders' Agreement, a commissioned IP valuation, and a board that includes a Non-Executive Chairman and at least two independent NEDs, DM-XTech UK will be ready to open its data room and engage institutional Series A investors from a position of credibility and structural readiness.

1.7 The Strategic Point

DM-XTech UK does not need to look public too early. It needs to look institutional, disciplined, and transaction-ready. By solving the £2.00 Problem while remaining a private limited company, DM-XTech UK can preserve flexibility, avoid unnecessary PLC compliance costs, and still present itself as a credible capital-markets platform capable of absorbing a major Series A investment and later supporting a SPAC or de-SPAC pathway if and when that becomes commercially appropriate.

The restructuring creates the mechanical infrastructure for everything downstream: the equity incentive pool, the founder vesting schedules, the licensor participation structure, and the eventual Series A conversion mechanics all depend on having a properly architected share capital base to operate within. A company that arrives at a Series A with a two-share capital structure signals to every serious investor that it is not ready. A company that arrives with a properly subdivided share capital, a clean allotment history, an arm's-length IP contribution on file, and investor-grade governance in place signals that it is.