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Capital and financing

Issue of shares

Allotment of shares

This is where the shares are allocated to a person under a contract of allotment.
Once the shares are allotted and the holder is entered in the register of members,
they become a member of the company.

Authority, discounts & premiums

The directors need authority to allot shares. This may be given by:

 The articles, or

 Ordinary resolution.

The authority must state:

 The maximum number of shares to be allotted, and

 The expiry date for the authority (max. 5 years).

The directors of a private company with only one class of shares may allot shares of
that class unless it is prohibited by the articles: s.550 CA 2006.

Issue at a discount Issue at a premium

 Shares cannot be issued at a s.610 CA06 requires any premium to be
discount on nominal value (s.580 credited to a share premium account,
CA06). which may only be used for:

 If this rule is breached, issue is still  writing off the expenses of the
valid but the shareholder is liable to issue of those shares
pay the company the discount, plus
interest.  writing off any commission paid on
the issue of those shares
 Debentures may be issued at a
discount if no immediate right to  issuing bonus shares.
convert to shares.

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