Allotment & Issue of Shares
Use these documents when your company needs to create and issue new shares. This is the standard process for bringing in new cash investment, capitalising a director's loan, or introducing a new business partner.
Because issuing new shares dilutes the percentage ownership of existing shareholders, the Companies Act 2006 requires you to follow a strict order of priority. You generally cannot issue shares without first checking you have the authority to do so and respecting existing pre-emption rights.
Compliance: Before You Start
Before using the minutes or resolutions, you must check two things:
- Authority to Allot (s550/s551): Do the directors have the power to issue shares? In private companies with one class of shares, this is often automatic. If not, you need a shareholder resolution to grant it.
- Pre-emption Rights (s561): Existing shareholders have a legal right to be offered the new shares first. If you are bringing in a new investor, you must either follow the pre-emption procedure or pass a resolution to "disapply" (waive) these rights.
🔀 Document Toolkit: Typical Sequence (may vary)
Guidance & Preparation (Start Here) Read these first to understand the legal requirements and ensure you don't miss a step.
- Guidance Notes - Share Capital
- Guidance Note: Issuing & Transferring Shares
- Guidance Note: Fully Paid, Partly Paid & Unpaid Shares
- Issue & Allotment of Shares Checklist
Step 1: Shareholder Permissions Use these if the directors need authority to allot or need to bypass pre-emption rights to bring in a new investor.
- Shareholders’ Ordinary Resolution - Authority To Allot New Shares
- S.569 Disapplication of Pre-emption rights - Special Resolution (private company with one class of shares only)
- S.570 Shareholders’ Special Resolution - Disapplication Of Pre-Emption Rights
- Shareholder Resolutions – Authority to Allot Redeemable Shares
- Deed of Waiver of Pre-emption Rights
Step 2: Board Approval Once authority is established, the directors must hold a board meeting to formally approve the investment and allot the shares.
- Board Minutes – Issue & Allotment of New Shares Approval by Written Resolution
- Board Minutes – Issue & Allotment of New Shares Approval by General Meeting
- Board Minutes – Directors’ Resolution to Allot Shares for Cash
Step 3: Letters & Applications The paper trail between the company and the investor (the offer and acceptance of the shares).
- Invitation to Apply for New Shares
- Letter of Application for New Shares
- Confirmation of Share Allotment
Step 4: Filing & Reporting You must report the new shares to Companies House within one month using Form SH01.
- Guidance Notes - Share Capital
- Guidance Note: Issuing & Transferring Shares
- Guidance Note: Fully Paid, Partly Paid & Unpaid Shares
- Issue & Allotment of Shares Checklist
- Shareholders’ Ordinary Resolution - Authority To Allot New Shares
- S.570 Shareholders’ Special Resolution - Disapplication Of Pre-Emption Rights
- S.569 Disapplication of Pre-emption rights - Special Resolution (private company with one class of shares only)
- Shareholder Resolutions – Authority to Allot Redeemable Shares
- Board Minutes – Issue & Allotment of New Shares Approval by Written Resolution
- Board Minutes – Directors’ Resolution to Allot Shares for Cash
- Board Minutes – Issue & Allotment of New Shares Approval by General Meeting
- Invitation to Apply for New Shares
- Letter to Companies House – Filing Resolutions
- Letter of Application for New Shares
- Confirmation of Share Allotment
- Deed of Waiver of Pre-emption Rights
- CHF - SH01 - Return Of Allotment Of Shares
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Frequently Asked Questions
Do our directors have the power to issue new shares, or do shareholders have to approve it?
Check first, it is the commonest failure point. In a private company with a single class of shares the directors can usually allot without further authority. If you have more than one class, or are creating one, the directors need authority from the articles or an ordinary resolution stating the maximum number of shares and lasting no more than five years. The templates here include the section 551 shareholder resolution and matching board minutes.
Can we issue shares straight to a new investor, or do existing shareholders get first refusal?
Existing shareholders generally have statutory pre-emption rights: new equity shares for cash must be offered to them first, in proportion to their holdings. To bring in an outside investor you either run that offer process and let shareholders decline, or disapply the rights, typically by special resolution or through the articles. Issues wholly for non-cash consideration fall outside the rights. This sub-folder includes the disapplication resolutions and waiver letters.
What is the step by step process for allotting new shares once we have authority?
Board meeting to approve the allotment and check authority and pre-emption, receipt of the application and payment from the incoming shareholder, board resolution to allot, entry of the new member in the register of members, issue of the share certificate and filing form SH01 with its statement of capital at Companies House within one month. The allotment letters, minutes and filing instructions here follow exactly that sequence.
We want to convert a director's loan into shares. Does that work like a normal share issue?
Yes, structurally it is an allotment where the consideration is release of the loan rather than new cash. You still need allotment authority and board approval, and because the consideration is not cash the statutory pre-emption rights do not apply, though treating other shareholders fairly still matters in a small company. Record the loan capitalisation clearly in the minutes and the SH01's statement of capital. The templates cover this pattern alongside cash issues.
What happens if we miss the one month deadline for filing the SH01?
File it late, immediately. The allotment itself remains valid, the shares exist once the register of members is written up, but the company and every officer in default commit an offence and the public record misstates your capital until you correct it, which surfaces in due diligence and bank checks. Late filing is routine to fix and Companies House accepts overdue SH01s. Diarise the deadline from the allotment date, not the payment date.