Allotment of subscriber shares
Published by a LexisPSL Corporate expert

The following Corporate practice note provides comprehensive and up to date legal information covering:

  • Allotment of subscriber shares
  • Need for subscriber shares
  • Process for the allotment of subscriber shares
  • Power to allot shares
  • Application of pre-emption rights
  • Payment for subscriber shares
  • Steps required following allotment of subscriber shares

Allotment of subscriber shares

Under the Companies Act 2006 (CA 2006), a company is formed when one or more persons:

  1. subscribe their names to a memorandum of association, and

  2. comply with the registration requirements prescribed in the CA 2006

Such persons are known as subscribers.

Need for subscriber shares

A company that is to have a share capital must allot at least one share to each of its subscribers, so that shares in the company exist and it has shareholders on its incorporation. This requirement is reflected in the prescribed format for a company's memorandum of association, which is a simple statement by the subscribers that they:

  1. wish to form a company under the CA 2006, and

  2. agree to become members of the company and, in the case of a company having a share capital, to take at least one share each

It must include the name of each subscriber and be authenticated by them.

It is not possible for subscriber shares to be allotted on the basis that they are held jointly, as Companies House interprets CA 2006, ss 7 and 8 as requiring each subscriber for shares in a new company to be a single natural person or a single corporate entity.

The memorandum of association of a company cannot be amended after incorporation. Prior to 1 October 2009, the memorandum of association was a more lengthy document that

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