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 document? for the grant of both a put option and call option over shares in a private limited company so that both the buyer has an option to purchase the shares and the seller has an option to sell the shares What are the key features? 24 clauses over 16 pages grant of the put and call options, with related definitions of option shares, exercise conditions and exercise periods put option exercise and form of exercise notice call option exercise and form of exercise notice mechanics for sale and purchase of option shares warranties and undertakings from the seller What else do I need to know? The principal matters which the parties to a put and call option agreement will need to negotiate include: option shares: the number of option shares exercise conditions: whether either option exercise is subject to satisfaction of any pre-conditions exercise periods: the time periods during which the seller may exercise the put option and the buyer may exercise the call option exercise price: the price payable for the shares What other docs are available? For alternative option agreements over shares, see: Call Option Agreement – shares Put Option Agreement – shares

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 document?

for the grant of both a put option and call option over shares in a private limited company
so that both the buyer has an option to purchase the shares and the seller has an option to sell the shares

What are the key features?

24 clauses over 16 pages
grant of the put and call options, with related definitions of option shares, exercise conditions and exercise periods
put option exercise and form of exercise notice
call option exercise and form of exercise notice
mechanics for sale and purchase of option shares
warranties and undertakings from the seller

What else do I need to know?

The principal matters which the parties to a put and call option agreement will need to negotiate include:

option shares: the number of option shares
exercise conditions: whether either option exercise is subject to satisfaction of any pre-conditions
exercise periods: the time periods during which the seller may exercise the put option and the buyer may exercise the call option
exercise price: the price payable for the shares

What other docs are available?

For alternative option agreements over shares, see:

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

When do I use this document?

What are the key features?

What else do I need to know?

When do I use this document?

What are the key features?

What else do I need to know?

What other docs are available?

Explanatory Guides

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

Shareholder decision making in private companies – what you need to know

Create your document in 3 Easy Steps

PaperRock offers affordable, legal document templates, written by experienced and expert lawyers, trusted by businesses across the UK and beyond. No hidden charges or trial sign-ups are required to complete your document.

“I have worked in legal and business affairs for over 25 years and need access to a wide range of corporate and commercial legal precedents. Paperrock is a refreshing source of high-quality legal templates. Superb value for money.”

Amanda | Bannister Creative

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“As an SME Paperrock saves us the legal fees we’ve previously had to spend. In these challenging times that's a big help. Great products and support.”

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

When do I use this document?

What are the key features?

What else do I need to know?

When do I use this document?

What are the key features?

What else do I need to know?

What other docs are available?

Explanatory Guides

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

Related Articles

Shareholder decision making in private companies – what you need to know

Create your document in 3 Easy Steps

PaperRock offers affordable, legal document templates, written by experienced and expert lawyers, trusted by businesses across the UK and beyond. No hidden charges or trial sign-ups are required to complete your document.

“I have worked in legal and business affairs for over 25 years and need access to a wide range of corporate and commercial legal precedents. Paperrock is a refreshing source of high-quality legal templates. Superb value for money.”

Amanda | Bannister Creative

“It’s hard to find legal documents on the internet you can really trust. Knowing an expert lawyer has drafted what I need, gives my business the edge and gives me peace of mind.”

Elle, Founder | Winslow skincare & aesthetics.

“As an SME Paperrock saves us the legal fees we’ve previously had to spend. In these challenging times that's a big help. Great products and support.”

Giles, MD | Boniti Ltd.

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