How are New Shares Issued?

How Does a Company Issue New Shares?


Once you have established that you have the power to issue new shares, the number of shares and their price should be decided. However shares cannot be issued at less than their nominal value. If you sell them for more than their nominal value, the excess must be transferred to a share premium account.

If new shares are to have different voting or other rights to existing shares, they are said to form a new class of share and those rights will have to be incorporated into the Articles of Association.

Shares may be issued on a fully paid or partly paid basis (but note that the Model Articles do not permit partly paid shares). With private companies, payment for shares need not be in cash (e.g. they could be given in return for the performance of services at a value) and there are few other restrictions. However, with public companies there are requirements as to the provision of consideration for shares prior to allotment.

Share certificates must be ready for the new shareholders within two months of issue. Within one month of such issue, a return of allotments (Form SH01) must be filed with Companies House.

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