Issue of Shares

Issue of Shares

A company may issue new shares for a variety of reasons.  These include to raise finance by issuing new shares for investment into the company, to add new shareholders as owners of part of the business and on the exercise of employee share options.  As a result of the issue of new shares, the total number of shares in the issued capital of the company is increased.

The process for the new issue of shares requires the preparation and signature of various documents.

The process will also depend on whether the process for the issue of shares is restricted or otherwise regulated by the company’s Articles of Association or, if there is one, the company’s Shareholders Agreement.  For example, the issue of shares may be subject to a pre-emption procedure, under which the existing shareholders in the company have a priority right to acquire the new shares before they may be issued to a third party.

Our section on the issue of shares covers the documents which will be necessary for a standard share issue by a private limited company without a separate subscription, or investment, agreement for the shares.

If the issue of shares is in connection with a negotiated transaction for the investment for shares in the company, see Investing in a Company.