Issue and Allotment of Shares
It is highly likely that many of our customers have had to, or will have to change their company’s share structure at some point. Adding new shareholders or changing the existing proportion of shares between shareholders is often how businesses grow and obtain new investment. However subject to certain exceptions, new shares can only be allotted and then issued to shareholders in accordance with the provisions of the Companies Act 2006.
Our sub-folder of templates on the allotment, issue and transfer of shares guides customers through this process and this month we have added several new documents to this sub-folder to assist customers during the process of issuing and allotting new shares in a company. These include:
· alternative board minutes approving the issue and allotment of shares by general meeting rather than by written resolution;
· a template letter of invitation from a company to existing shareholders inviting applications for new shares in the company. This is relevant where pre-emption rights have not been disapplied and therefore as a matter of company law, shares must first be offered to existing shareholders in proportion to their current shareholding before being offered to outside investors;
· a template letter of application from a new or existing shareholder to the company applying for some or all, of the new share allotment; and
· a template confirmation letter from a company to a shareholder confirming their share allotment.
These new templates are designed to work alongside the other templates in this subfolder to enable customers to follow and complete the process of allotting and issuing new shares in their company. They aim to provide greater choice for companies in the process of share allotment and issue according to their specific needs and the procedure they are following.
The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.