Shareholders’ Ordinary Resolution - Authority To Allot New Shares
This Shareholders’ Ordinary Resolution gives the directors authority to allot shares under section 551 of the Companies Act 2006 where shareholder authority is required.
The Companies Act 2006 allows a private company with only one class of shares to allot shares without requiring the authority of the company’s shareholders unless the company’s articles specifically prohibit it (section 550 Companies Act 2006).
Companies incorporated prior to 1st October 2009, companies with more than one class of share or companies incorporated after this date but with a restriction in their articles, must however either include a provision in their articles or pass an ordinary resolution to give the directors a general authority to allot shares (section 551 Companies Act 2006).
This template ordinary resolution contains two options, a specific or a general authority to allot. The first option should be used to enable the directors to allot a specific number of shares of a new class. The second option gives the directors a general, unconditional authority to allot shares of the new class. Section 550 will no longer apply once a company has more than one class of share, therefore it is sensible to give the directors a general authority to allot the existing class of shares as well as the new class. This has been included in the wording of the template resolution within the second option.
In all cases, the authority is subject to an expiry date limited to a maximum of five years. The resolution must also state the maximum amount of shares to be allotted under the authority. A specific authority will state the number of shares to be allotted, a general authority will usually specify the maximum nominal value of shares to be allotted rather than the total number of shares.
For customers requiring an authority to allot and a disapplication of pre-emption rights, the general authority option must be used.
This ordinary resolution may be passed either as a written resolution or at a general meeting of the shareholders. A private company is likely to pass it as a written resolution. Our relevant template written resolution can be accessed here .
A copy of the resolution must be sent to Companies House within 15 days of being passed.
Optional phrases / clauses are enclosed in square brackets. These should be read carefully and selected to be compatible with one another. Unused options should be removed from the document. This resolution is in open format. Either enter the requisite details in the highlighted fields or adjust the wording to suit your purposes.
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