On incorporation the only shares in issue will be those subscribed by the founders of the company (the subscribers).
During its life a company may wish to issue new shares for many different reasons such as to reflect a new investment in the company, to reward key employees, in association with a new director being appointed, following the creation of new or multiple share classes or the re-designation of shares from one class to another.
Generally ordinary shareholders of a company have a pre-emption right in relation to the issue of new shares. This means that in most circumstances any existing ordinary shareholders must first be offered any new shares issued by a company pro-rata to their existing shareholding.
Varying the pre-emption right
The pre-emption right can be varied in the Articles of Association of the company and the directors might be given power by the Articles or members' special resolution to allot shares as if this pre-emption right did not apply. Existing shareholders can also waive this right if they choose to do so.
The pre-emption right does not apply to bonus shares, an issue of shares for non cash consideration or an issue of shares to be held under an employee share scheme.
If a Shareholders Agreement exists this may also restrict the issue of shares.
Do I need help to issue new shares?
If you are considering issuing new shares in your company then you will need to consider the circumstances in which you can do so, to whom shares can be issued and whether any pre-emption rights need to be waived or varied in order to accommodate this.
We can provide you with a fixed quotation for preparing all of the necessary documentation.
What is the next step?
Click the 'MAKE ENQUIRY' button below or call us on 08456 800 727.