How To Issue Shares

When you form a company it is the requirement of  the Companies Act that at least one share must be issued at the time of incorporation. This is called subscriber share and carries the value (nominal value *) you choose at the time of incorporation.

Q. A question we are often asked by our customers after they have formed a company is – how can I add a ‘partner’ to my business?

A. Limited companies don’t have partners, they have directors and shareholders, so if you mean that you want to give a share of your company to another person then you need to issue further shares.

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Here are 5 easy steps to issuing shares

Check that your company’s Articles don’t have a restriction on the maximum number of shares that can be issued. This is relevant to companies incorporated before 1 October 2009 because these older companies used to have an authorised share capital.

  1. Complete an application form
    The person wishing to own the new shares completes an application form and returns it to the Company with the required payment. So, if the nominal value of the shares is £1 each and he/she is applying for 100 shares then £100 will be payable to the Company.
  2. Pass a Resolution
    The directors pass a resolution to approve the application and allot the shares to the person applying for them.
  3. Send form SH01 to Companies House
    Return of allotment form SH01 must be sent to the Registrar within one month of the allotment date.
  4. Prepare Share Certificate
    The company secretary prepares the share certificate. The share certificates are available in the statutory register. The company must issue share certificates within two months of allotment.
  5. Complete Members Register
    The name of the new share holders must be entered in the company’s statutory register to complete this task of making them members.

Since allotting shares is so easy after the company is incorporated, you don’t need to think about the share structure too much when forming a company. Just form the company issuing one share to the director or another person. Further shares can be issued at any time after the company is incorporated. Call the eformations team on 0208232 5479 for further advice on how to form a company or how to issue shares. We are well equipped with knowledge and experience.

*Nominal value, also know as par value or face value of a share is the value at which it will be redeemed. Nominal value is not the same as market value. If the market value is higher than the nominal value, the difference is called a premium.

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