Preparing to issue shares checklist

Issuing new shares in a company is an important step, so you want to make sure you get it right. Use our checklist to make sure you have all the preparatory steps covered.

Issuing new shares

A company may wish to issue new shares for a variety of reasons. For example, they may be issued to directors or employees to give them a stake in the company’s growth, or to investors in return for their investments. New shares are created by the shareholders, who grant the power to issue and allot them to the directors. Before new shares are issued, a company needs to check what restrictions may apply.

Restrictions

The company needs to check its Articles and previous resolutions to resolve five key points:

1. Does the company have an authorised share capital and, if so, does it need increasing or removing?
2. Do new share rights need to be drafted?
3. Do the directors have an existing authority to allot and, if so, is it still valid and does it cover all of the shares to be allotted?
4. Do the shareholders have pre-emption rights and, if so, will the company follow the pre-emption procedure or not?
5. Are there any other regulatory hurdles to overcome?

Admin

If the shareholders have needed to pass the special or ordinary resolutions discussed in the checklist, they must be filed at Companies House within 15 days.