Share allotment, issue and pre-emption—fundamentals
Share allotment, issue and pre-emption—fundamentals

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

  • Share allotment, issue and pre-emption—fundamentals
  • Contents
  • What is meant by the term ‘maintenance of capital’?
  • What are the different classes of shares?
  • What constitutes a variation of class rights?
  • What is the nominal (or par) value of a share?
  • What is the difference between an allotment and issue of shares?
  • What are the preliminary considerations on an allotment of shares?
  • What authority is required to allot shares in a private company with only one class of shares?
  • What authority is required to allot shares in a private company with more than one class of share or a public company?
  • More...

Share allotment, issue and pre-emption—fundamentals

A company’s share capital comprises the number of shares it has allotted and issued to shareholders at any given time.

Subject to certain exceptions:

  1. the directors of a company must not exercise any power of the company to allot shares in the company (or to grant rights to subscribe for, or convert any security into, shares), other than in accordance with the Companies Act 2006 (CA 2006), and

  2. a company must not allot equity securities unless it has first offered to allot those equity securities to each existing ordinary shareholder in the company (this right of first refusal given to the existing ordinary shareholders is known as a 'pre-emption right')

Contents

What is meant by the term ‘maintenance of capital’?

What are the different classes of shares?

What constitutes a variation of class rights?

What is the nominal (or par) value of a share?

What is the difference between an allotment and issue of shares?

What are the preliminary considerations on an allotment of shares?

What authority is required to allot shares in a private company with only one class of shares?

What authority is required to allot shares in a private company with more than one class of share or a public company?

What happens if a director fails to obtain the appropriate authority to allot shares?

What other liabilities are there for the directors of a listed company

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