{"id":890,"date":"2021-12-22T06:14:55","date_gmt":"2021-12-22T06:14:55","guid":{"rendered":"https:\/\/uk.legalvision.com.au\/?p=890"},"modified":"2025-07-02T00:42:35","modified_gmt":"2025-07-01T23:42:35","slug":"business-issue-shares","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/corporations\/business-issue-shares\/","title":{"rendered":"Can My Business Issue Shares in England and Wales?"},"content":{"rendered":"\n<p><span style=\"font-weight: 400\">As the sole owner of your own business, you may be hoping to grow by bringing in additional shareholders. Shares are a measure of ownership in a business. If you are thinking of issuing shares, you may be wondering what the process will be. <\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">This article will first explain what kinds of business organisations can issue shares before explaining the difference between share issues and share transfers. It will then provide an overview of the process for issuing shares in your business.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Can My Business Issue Shares?<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">Only limited companies can <a href=\"https:\/\/legalvision.co.uk\/corporations\/classes-company-shares\/\">issue shares<\/a>. Therefore, unless you have <a href=\"https:\/\/legalvision.co.uk\/corporations\/benefits-of-incorporation\/\">incorporated your business<\/a> as a company, your business will not be able to issue shares in the legal sense of the word.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">This is one of the reasons why the private limited company is the structure that most business owners choose to operate. Therefore, this article will only deal with issuing shares for businesses incorporated as a company.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Share Issue vs Share Transfer<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">A share is a form of property that a company can gift or sell to another person. However, before a company can transfer a share, they must first create it. Importantly, issuing shares and transferring them have different implications. So, it is vital to understand the distinction between them.<\/span><br><\/p>\n\n\n\n\n<a href=\"#content-next\"\n   class=\"block p-4 mt-10 text-xl font-bold text-center text-white no-underline bg-gray-800 rounded-t-xl\">\n    Continue reading this article below the form\n    <i class=\"text-xl fa-regular fa-arrow-down\"><\/i>\n<\/a>\n<div class=\"px-6 pt-10 pb-12 mb-10 text-center bg-gray-100 rounded-b-xl sm:px-12 test\">\n    <div class=\"mb-8 text-2xl font-bold text-orange\">\n        Need legal advice?\n        <br>\n        <span class=\"text-lg not-prose\">\n                            Call <a href=\"tel:+448081968584\" class=\"not-prose\">0808 196 8584<\/a> for urgent assistance.\n                <br>\n                Otherwise, complete this form, and we will contact you within one business day.\n                    <\/span>\n    <\/div>\n\n    \n\n<div class=\"not-prose flex justify-center text-left gform_input_bg_white    \">\n    <script>\nvar 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When you incorporated the company, you issued yourself 10,000 shares in exchange for giving the company \u00a310,000 of your own money.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">After a year\u2019s hard work, the company has grown and is worth \u00a320,000.\u00a0<\/span><br><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Two Offers<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400\">Having inspected your company\u2019s accounts, your friend, Roscoe, and your sister, Darlene, approach you separately.&nbsp;<\/span><\/p>\n\n\n\n<ol class=\"wp-block-list\"><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Roscoe offers to give MeCo Limited \u00a320,000 in exchange for equal ownership in the company; and&nbsp;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Darlene offers to pay you \u00a310,000 in exchange for half of MeCo\u2019s shares.&nbsp;<\/span><\/li><\/ol>\n\n\n\n<p><span style=\"font-weight: 400\">Roscoe is effectively asking MeCo Limited to create new shares as payment for the company receiving \u00a320,000. This is a <\/span><b>share issue<\/b><span style=\"font-weight: 400\">.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">Darlene, on the other hand, wants to pay you directly. MeCo is still worth \u00a310,000 regardless of whether you agree to the deal or not. This is a <\/span><b>share transfer<\/b><span style=\"font-weight: 400\">.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">In both transactions, your ownership in the company has been \u201cdiluted\u201d. However, Roscoe\u2019s proposal directly benefits the company, whereas Darelens\u2019 directly benefits you. Roscoe\u2019s proposition will require you to issue new shares. Darlene\u2019s does not \u2014 you can simply transfer them to her by signing a share transfer form.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">For the rest of the article, we will consider share issues only.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Issuing New Shares&nbsp;<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">In practice, before your business can issue new shares, you will need to know how many shares to issue. You should base this figure on:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">the value of the investment;&nbsp;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">the value of your company; and&nbsp;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">negotiating parties.&nbsp;<\/span><\/li><\/ul>\n\n\n\n<div class=\"box box--icon box--info\">\n<p><span style=\"font-weight: 400\">Unfortunately, share valuation is rather complex. It is best practice to seek a professional advisor.&nbsp;<\/span><\/p>\n<\/div>\n\n\n\n<p><span style=\"font-weight: 400\">Returning to the above example, Roscoe has made a compelling offer. You decide to accept it. Likewise, as sole director, you issue 10,000 new shares to reflect the fact his investment has doubled the value company.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">Next, you need to know the process for allotting new shares.\u00a0<\/span><br><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Check your Company\u2019s Articles of Association<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400\">Your company\u2019s <a href=\"https:\/\/legalvision.co.uk\/corporations\/articles-of-association\/\">articles of association<\/a> are the documents that govern how your company is to be managed. You will have filed these articles with <\/span><a href=\"https:\/\/www.gov.uk\/government\/organisations\/companies-house\"><span style=\"font-weight: 400\">Companies House<\/span><\/a><span style=\"font-weight: 400\"> when you incorporated.<\/span><\/p>\n\n\n\n<div class=\"box box--icon box--info\">\n<p><span style=\"font-weight: 400\">Most small businesses incorporating as a company, especially those with a sole shareholder-director, choose to adopt the model articles of association. But of course, you can make amendments to this document to better reflect your business\u2019 needs.&nbsp;<\/span><\/p>\n<\/div>\n\n\n\n<p><span style=\"font-size: revert\">If you are creating more shares of the same class, as a director, you will not need to obtain the consent of your company&#8217;s shareholders.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">On the other hand, your business may issue shares of a different class. In that case, the shareholders will need to vote to approve the allotment through an ordinary resolution. If you are the sole shareholder-director, a simple statement recording this fact is sufficient. But where your company has more than one shareholder, you will need evidence that the shareholders voted on the resolution.\u00a0<\/span><br><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Pre-Emption Rights<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400\">As a director, you must ensure shareholders have exercised their pre-emption rights. This simply means that you have offered each existing shareholder the option to purchase additional stock to preserve their percentage of ownership in the company.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Payment for New Shares<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">Additionally, your shares will have a nominal value. Likewise, you cannot issue below this amount.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">The nominal value is the price of each share of the same class when first issued by your company. For ordinary shares, this will be the value you recorded with Companies House.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">Subject to your company\u2019s articles, as a director, you can agree for the shareholder to pay the full amount later. However, this may cause certain accounting issues when filing your annual financial reports with Companies House.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">Further, other parties can purchase shares in exchange for non-cash valuable assets, like a car or piece of machinery. However, there are certain legal and accounting implications to note.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Share Premium Account&nbsp;<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">When you incorporated your company, you issued your shares at a nominal value of \u00a31.00 (and you received 10,000 shares in exchange for \u00a310,000).&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">However, because your company grew, Roscoe had to effectively pay twice as much per share to get the same number of shares. In other words, he had to pay \u00a32 per share. This \u00a31 difference between the nominal and \u201cmarket value\u201d price is called the share premium.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">You must record at what premium you issued the shares. Additionally, the amount must be credited to your share premium account to comply with share capital preservation laws.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Directors Approval&nbsp;<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">It is common practice for the person you are allotting shares to send a \u201csubscription application letter.\u201d This letter is a formal request to purchase shares in exchange for payment to the company.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">If your company has more than one director to approve the allotment, you must convene a meeting. Likewise, record the fact that the directors agree to issue the shares according to the terms of the subscription letter. You should indicate in the meeting minutes that all directors have approved the share allotment.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Registering the Allotment&nbsp;<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">Additionally, English company law considers an individual to be the owner of a portion of a company\u2019s shares at the point the company registers them as a member in their register of members. Therefore, you should promptly register this when you receive payment.\u00a0<\/span><br><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Person of Significant Control?<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400\">Since Roscoe will own 50% of the company\u2019s shares, he is considered a person of significant control. This is anyone that owns 25% or more of a company\u2019s shares.&nbsp;<\/span><\/p>\n\n\n\n<div class=\"box box--icon box--info\">\n<p><span style=\"font-weight: 400\">You will need to alert Companies House of this fact.&nbsp;<\/span><\/p>\n<\/div>\n\n\n\n<p><span style=\"font-weight: 400\">Further, you will need to identify the level of their shares and voting rights within the following categories:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">over 25% up to (and including) 50%;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">more than 50% and less than 75%; or<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">75% or more.<\/span><\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Issuing Share Certificates<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">You will also need to issue share certificates to your new shareholder(s). In most cases, you would issue these within two months after allotting the shares.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">Importantly, there is no required form that share certificates must take. You can even issue the certificate electronically (such as .pdf or .word).&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">At the least, the share certificates should specify the:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">shareholders\u2019 name;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">number of shares issued;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">nominal value of the shares; and<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">amount paid.&nbsp;<\/span><\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Filing Requirements \u2013 SH01<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">Finally, you will need to complete the SH01 Return of Allotment and Statement of Capital form (downloadable from Companies House) and file it within one month following the share issue.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">If you had to pass an ordinary or special resolution, you must file a copy with Companies House.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">If you had to subdivide or consolidate your shares, you will need to file an SH-02.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">Further, if the share issue resulted in any changes to persons with significant control (PSCs), you will need to file this with Companies House.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Key Takeaways&nbsp;<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">Issuing new shares, also known as a share allotment, is necessary if you are raising equity finance. In exchange for giving money to the company, the investor receives company shares. You will need to check your articles of association to ensure you are authorised to issue new shares. Alternatively, the existing shareholders may need to authorise the allotment, either through an ordinary or special resolution. There are some additional filing requirements with Companies House.\u00a0<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">If you need help raising equity, our <a href=\"https:\/\/legalvision.co.uk\/corporate-lawyers-lp\/\">experienced corporate lawyers<\/a> can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on <a href=\"tel:+448081968584\" class=\"AVANSERnumber dynamic-number\">0808 196 8584<\/a> or visit our <\/span><a href=\"https:\/\/legalvision.co.uk\/membership\"><span style=\"font-weight: 400\">membership page<\/span><\/a><span style=\"font-weight: 400\">.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Frequently Asked Questions<\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1640153267584\"><strong class=\"schema-faq-question\"><strong>What is a share issue?<\/strong><\/strong> <p class=\"schema-faq-answer\">A share issue is when someone gives your company money, and in exchange, your company gives them a share of ownership (or \u201cequity\u201d). A share issue is also known as a share allotment.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1640153281539\"><strong class=\"schema-faq-question\"><strong>Are shares and equity the same?<\/strong><\/strong> <p class=\"schema-faq-answer\">In the context of who owns a company, you can use both terms interchangeably.<\/p> <\/div> <\/div>\n","protected":false},"excerpt":{"rendered":"<p>As the sole owner of your own business, you may be hoping to grow by bringing in additional shareholders. Shares are a measure of ownership in a business. If you are thinking of issuing shares, you may be wondering what the process will be. This article will first explain what kinds of business organisations can<a href=\"https:\/\/legalvision.co.uk\/corporations\/business-issue-shares\/\">Continue reading <span class=\"sr-only\">&#8220;Can My Business Issue Shares in England and Wales?&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13461,"featured_media":542,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"1021,2012,3634,1001,1707,4279","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[28],"tags":[89,90,97,98,99,100],"class_list":["post-890","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-corporations","tag-corporation","tag-company","tag-issue-shares","tag-share-transfer","tag-company-constitution","tag-articles-of-association"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Can My Business Issue Shares in England and Wales? | LegalVision UK<\/title>\n<meta name=\"description\" content=\"Only limited companies can issue shares in England and Wales. This article explores the process to issue shares in your business.\u00a0\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/legalvision.co.uk\/corporations\/business-issue-shares\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Can My Business Issue Shares in England and Wales? | LegalVision UK\" \/>\n<meta property=\"og:description\" content=\"Only limited companies can issue shares in England and Wales. This article explores the process to issue shares in your business.\u00a0\" \/>\n<meta property=\"og:url\" content=\"https:\/\/legalvision.co.uk\/corporations\/business-issue-shares\/\" \/>\n<meta property=\"og:site_name\" content=\"LegalVision UK\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/LegalVision\" \/>\n<meta property=\"article:published_time\" content=\"2021-12-22T06:14:55+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-07-01T23:42:35+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/4\/2021\/11\/30230108\/brand-design-00036.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1600\" \/>\n\t<meta property=\"og:image:height\" content=\"1092\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Kieran Ram\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@LegalVision_law\" \/>\n<meta name=\"twitter:site\" content=\"@LegalVision_law\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Kieran Ram\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"7 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/legalvision.co.uk\\\/corporations\\\/business-issue-shares\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/legalvision.co.uk\\\/corporations\\\/business-issue-shares\\\/\"},\"author\":{\"name\":\"Kieran Ram\",\"@id\":\"https:\\\/\\\/legalvision.co.uk\\\/#\\\/schema\\\/person\\\/5a59ade89273f68f939c7cb8cc66e6f1\"},\"headline\":\"Can My Business Issue Shares in England and Wales?\",\"datePublished\":\"2021-12-22T06:14:55+00:00\",\"dateModified\":\"2025-07-01T23:42:35+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/legalvision.co.uk\\\/corporations\\\/business-issue-shares\\\/\"},\"wordCount\":1535,\"image\":{\"@id\":\"https:\\\/\\\/legalvision.co.uk\\\/corporations\\\/business-issue-shares\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/img.legalvision.com.au\\\/wp-content\\\/uploads\\\/sites\\\/4\\\/2021\\\/11\\\/30230108\\\/brand-design-00036.jpg\",\"keywords\":[\"corporation\",\"company\",\"issue shares\",\"share transfer\",\"company constitution\",\"articles of association\"],\"articleSection\":[\"Corporate Articles\"],\"inLanguage\":\"en-GB\"},{\"@type\":[\"WebPage\",\"FAQPage\"],\"@id\":\"https:\\\/\\\/legalvision.co.uk\\\/corporations\\\/business-issue-shares\\\/\",\"url\":\"https:\\\/\\\/legalvision.co.uk\\\/corporations\\\/business-issue-shares\\\/\",\"name\":\"Can My Business Issue Shares in England and Wales? | LegalVision UK\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/legalvision.co.uk\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/legalvision.co.uk\\\/corporations\\\/business-issue-shares\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/legalvision.co.uk\\\/corporations\\\/business-issue-shares\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/img.legalvision.com.au\\\/wp-content\\\/uploads\\\/sites\\\/4\\\/2021\\\/11\\\/30230108\\\/brand-design-00036.jpg\",\"datePublished\":\"2021-12-22T06:14:55+00:00\",\"dateModified\":\"2025-07-01T23:42:35+00:00\",\"author\":{\"@id\":\"https:\\\/\\\/legalvision.co.uk\\\/#\\\/schema\\\/person\\\/5a59ade89273f68f939c7cb8cc66e6f1\"},\"description\":\"Only limited companies can issue shares in England and Wales. 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