Company Law Solutions provides comprehensive, legally compliant services relating to the allotment and issuing of shares. If you run a private company looking to issue shares, we're here to help guide you through the process and ensure that your rights and those of your shareholders are protected.
Our team has years of experience in handling share issues and allotments in private companies. We understand that the process of issuing shares can be complex, but with our expertise, it can be made a smooth and straightforward process for you and your company.
What Is A Share Issue?
The act of distributing newly-created share capital to people who have applied to become shareholders in a company (or to be allocated further shares in it, if they are already shareholders), is known as a share issue. The phrases 'share issue' and 'share allotment' are now often used interchangeably, despite being - in technical terms - slightly different things.
What do Share Issues involve?
Many people think that issuing shares is as simple as sending a copy of form SH01 to Companies House. In the majority of circumstances, it isn't as straightforward as that. The company must for example ensure that the directors have the authority to allot the shares; that it ensures that existing shareholders' pre-emption rights are observed, or otherwise properly disapplied; that the issue would not breach any authorised capital provision in the articles of association; and so on.
Why Would A Company Issue Shares?
Issuing shares is done for a variety of reasons. A company may wish to do so in order to raise share capital (hence 'capital investment'); it may want to reward employees with their own stake in the company (or indeed issue shares as part of an employee share scheme); or it may simply want to introduce new shareholders alongside the existing ones.
How Are Share Prices Determined?
The issue price of a share is a matter for negotiation between the company and the allottee, but in reality it will be dictated by the company's asset value, profitablilty and prospects for the future. So, shares in a company which has existed (say) as a successful going concern for some time will often be issued at their market value - which is calculated by reference to the value of the company as a whole. Shares which are issued on the incorporation of the company, or shortly thereafter, are more likely to be issued at their nominal ('par') value, because of the lack of asset value represented by the new share capital at the time of issue.
Important Considerations When Issuing Shares
It is important for a company which is planning to issue new shares to be aware of the potential ramifications of doing so. A share issue may result in the dilution of the rights of the existing shareholders - in terms of their ownership of the company, their voting rights as members and their relative entitlement to a dividend. Similarly, if a company wishes to issue shares which have differing rights to those already in issue, it is important that the directors check its articles to ensure that it has the power to do so (and, where that is not the case, make the appropriate amendments).
Ensuring that Share Issues are carried out validly
Any company wishing to issue new shares must be aware of the rules set out for doing so in the Companies Act and the relevant subordinate legislation, as well as any provisions in its constitution relating thereto. For example, some companies' articles of association replace the statutory pre-emption rights with their own bespoke provisions, which would need to be either followed or disapplied by members' resolution at the time the new shares are issued.
The Company Law Solutions service provides all that’s required:
- guidance as to the applicable procedures
- minutes of directors' meetings
- notices of shareholders' resolutions
- shareholders' consents to resolutions
|From £135.00 + VAT
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