Allotment of Shares

What is an allotment of shares?

This is where the company agrees to issue shares to a new/existing shareholder in return for payment of the subscription price.

Step 1 - if there is any cap on the number of shares, this needs to be removed.

How is this removed?

If the company is incorporated under the CA 1985

• cap needs to be removed via OR

If the company is incorporated under the 2006:

• there is no ceiling on number of shares under the MA

• If there is one, remove it by SR.

Step 2 - do the company’s directors need authority to allot?

For private companies with only one class of shares = directors have automatic authority to issue shares of the same class (unless prohibited by Articles)

For CA 1985 companies = need OR

For other companies = authorisation via OR needed.

Step 3 - must pre-emption rights be disapplied on allotment?

Any new shares must be offered to the existing shareholders of a company (holding ordinary shares) in proportion their existing shareholdings.

The company will need to request the shareholders disapply these rights via SR

Step 4 - directors must pass a board resolution to allot the shares

A GM will not be needed in advance of the board meeting if:

• you are issuing shares to existing shareholders

• there is no limit on the number of shares can be issued.

What are the administrative requirements on allotment?

Any amendments to Articles, removal of share cap, removal of pre-emption rights and granting authority to allot needs to be filed to CH within 15 days.

Then you return allotment form and statement of capital within one month

Update register of members and send new share certificates within 2 months of allotment.

How long does the authority to allot last for?

5 years.