Do directors need shareholder approval to issue new shares?

Directors of a company are required under the Companies Act 2006 to have shareholder authority to allot new shares. An exception to the requirement to have authority is in the case of a private limited company with only one class of share provided that there is no prohibition on the allotment of new shares in the company’s Articles of Association. Where a company has more than one class of share, the directors will need shareholder authority to allot new shares unless there is an existing authority in place to allot shares either in the company’s Articles of Association or by a pre-existing ordinary resolution of shareholders which remains in force.

When do pre-emption rights apply on the issue of new shares?

In addition to the authority to allot new shares, an allotment of new shares may also be subject to pre-emption rights in favour of existing shareholders. Pre-emption rights give existing shareholders first refusal on an issue of new shares – the new shares must be offered to existing shareholders before they can be taken up by new investors or shareholders. Under the Companies Act 2006, pre-emption rights will apply on the issue of new shares by a private limited company unless: the pre-emption rights have been disapplied either in the company’s Articles of Association or by a special resolution of shareholders, or the issue of new shares is under an employee share scheme, wholly or partly for non-cash consideration or a bonus issue

When do I use this bundle? For an investment transaction with a single investor in a private limited company What documents are included? term sheet for an investment for ordinary shares Investment term sheet: ordinary shares investment NDA NDA: investment (short) legal due diligence checklist Due diligence checklist: investment investment and shareholders agreement Investment and Shareholders Agreement: established business single investor Articles of association Articles of Association: established business single investor

Shareholder resolutions: authority to allot shares and disapply pre-emption rights

Name: Shareholders Resolution Template - Paper Rock Docs
SKU: RES002.001
Price: 35.00 GBP
Availability: InStock

Shareholder resolutions to grant directors authority to allot new shares and to disapply shareholder pre-emption rights on the allotment of new shares.

to grant general authority to the directors to allot new shares up to a maximum specified amount of share capital
to disapply statutory pre-emption rights under the Companies Act 2006 for shares allotted pursuant to that general authority

What are the key features?

shareholder written resolutions – one ordinary resolution and one special resolution
ordinary resolution to grant general authority to directors to allot shares:
- up to a specified aggregate nominal amount of capital
- for a limited period (maximum permitted 5 years)
special resolution to disapply statutory pre-emption rights on the issue of new shares in relation to shares issued pursuant to the general authority

What else do I need to know?

For more information about the directors’ authority to allot shares and shareholder pre-emption rights, see, Issue of new shares

Description

When do I use this bundle?

For an investment transaction with a single investor in a private limited company

What documents are included?

term sheet for an investment for ordinary shares Investment term sheet: ordinary shares
investment NDA NDA: investment (short)
legal due diligence checklist Due diligence checklist: investment
investment and shareholders agreement Investment and Shareholders Agreement: established business single investor
Articles of association Articles of Association: established business single investor

Explanatory Guides

As with all of our document templates, your purchase will include access to clear explanatory guidance on the document and its use.

£35.00 exc VAT

Updated by a lawyer on 21/08/2024

Updated By a lawyer on 11/15/2022

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Shareholder resolutions: authority to allot shares and disapply pre-emption rights