How can shares allotted by a company be paid for?

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Published on LexisPSL on 27/11/2018

The following Corporate Q&A provides comprehensive and up to date legal information covering:

  • How can shares allotted by a company be paid for?

How can shares allotted by a company be paid for?

The Companies Act 2006 (CA 2006) sets out various restrictions and requirements in relation to payment for shares.

Any company (whether public or private) that allots shares:

  1. must not allot the shares at a discount, ie for less than their nominal value, and

  2. may, if so authorised by its articles of association, provide for there to be differences between the shareholders as to the amounts to be paid up on allotment of the shares and the times that those outstanding payments will be required to be made

In addition, under CA 2006, s 582, shares allotted by a company, and any premium on them, may be paid up in money or money’s worth (including goodwill and know-how). This effectively means that a company may accept payment for the shares allotted in cash or non-cash consideration. CA 2006, s 582 does not prevent a company from allotting bonus shares to its members or from paying up, with sums available for the purpose, any amounts for the time being unpaid on any of its shares (whether on account of the nominal value of the shares or by way of premium).

‘Cash’ is given a wide definition for these purposes by CA 2006, s 583. It includes foreign currency and means:

  1. cash received by the company

  2. a cheque received by the

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