5 actions needed to issue new company shares

5 actions needed to issue new company shares

When you’re bringing new investors or directors into your limited company, you’ll often offer them shares in the business. This is common when companies are raising money to grow.

But before you issue new shares, there are some important steps to follow.

Check you are allowed to issue shares to begin with

This is the first thing you need to do. The rules depend on when your company was set up.

If your company was incorporated on or after 1 October 2009 (under the Companies Act 2006), directors can issue new shares without asking other shareholders for permission, as long as:

• Your articles of association don’t say otherwise
• The company only has one type of share

If your company was incorporated before 1 October 2009 (under the Companies Act 1985 or earlier), you’ll need to pass an ordinary resolution to give directors the authority to issue shares.

If you have more than one class of shares, directors must get permission from existing shareholders before issuing new shares, regardless of when the company was incorporated.

Register the New Shares Properly

Once you’ve confirmed you have authority, you need to register the share issue in several places. Your new shareholder isn’t officially a member of the company until you do this.

Here’s where you need to record the details from the 5 actions needed to issue new company shares:

Your company’s register of members
This is your internal record of who owns shares in the company.

Your PSC register
If the new shareholder has significant control (generally 25% or more of shares), they need to be recorded in your People with Significant Control register.

Companies House
File form SH01 (return of allotments) within one month of issuing the shares. You’ll find the form on the Companies House website. This form covers details about the shares themselves, not the shareholders.

Your next confirmation statement
The SH01 form doesn’t include shareholder names, so you must add your new shareholders’ details in your next annual confirmation statement.

Your company accounts
Speak to your accountant to make sure the new shares are properly reflected in your financial records.

In Conclusion – keep everything in one place

Tracking share issues across different registers and forms can get complicated, especially as your company grows.

Getting share issues right matters. It keeps your company legally compliant and makes sure everyone’s ownership is properly recorded.  You can then use platforms such as Governance360 to manage the Organisation to make the most of this new share issue.