In this article:
Allocating shares at incorporation
There isn't a correct amount of shares you should allocate to a shareholder, as this depends on circumstance.
If you have more than one shareholder, keep in mind whether to give an equal or an unequal allocation of shares. For example, Shareholder A owns 1 share, and Shareholder B owns 1 share. This means they both equally own 50% of the company.
With our company formation packages, our shares are divided up of:
- Number of shares (the number of shares you want to issue)
- Value per share (the value of share in the currency amount)
- Share currency
- Share class
We default the shares at 1 = £1 just to keep things simple. However, you can change the number and value of shares should you wish to. If you're the only director and shareholder, you could simply issue 1 share to yourself. This means you own 100% of your company.
Should you wish to allocate 1p shares, please enter the value as "0.01" in the "Value Per Share" field.
Multiple share classes
When going through our online company registration, you can choose different share classes. We recommend to leave the default class as "Ordinary", however, you can change the share class by clicking the "Change Share Class" link.
Once clicked, you will then see a list of the possible share classes:
When choosing a share class, the default voting rights will automatically appear. You will need to update the voting rights i.e, if you choose multiple share classes, the voting rights should be different for each class.
To amend the voting rights, just click inside the "Voting Rights" text box:
If ever you want to revert to the default voting rights, just click the "reset to the default voting rights" link.
Please note: Ordinary shares are suitable for most companies. We do not recommend changing them unless you have received professional advice.
Allocating shares after incorporation
Then, you must tell Companies House within one month if you issue shares, and you must report all other changes to your share structure within 21 days. For more information, visit Companies House.
Changing the share class
If you're changing the share class, for example from Ordinary to Preference shares, you will need to file:
- a resolution (unless the company has just one single director and shareholder)
- a SH08 form
- a SH10 form (only if the votings rights require changing)
- amended Articles of Association
to Companies House within 15 days of agreement from all members of the company. Once filed, you will need to issue new share certificates to the shareholders. Please remember, changing the share class may affect dividend payments.
Please note: you will need to record the new share class information when your confirmation statement is due.
Unfortunately, we do not offer a joint shareholders option at incorporation due to legal formalities. However, you may able to do so with Companies House - 0303 123 4500.
If the shareholders jointly held, for example, 100 shares, then the information would need to be shown as follows.
Otherwise, the number of the shares shown on the shareholder's list would not match the statement of capital given:
Shareholder 1: Mr Smith owning 50 x £1 shares
Shareholder 2: Mrs Smith owning 50 x £1 shares
If you are unsure about how many shares to issue or the structure, you should seek professional advice from an accountant. Otherwise, you could end up making the share structure unnecessarily complex or not fit for purpose.