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Every company needs to initially make an amount of shares available to the current and future shareholders. This is done at no cost during the company registration process and is shown on the MOI Certificate of a company. Normally the total Share Allocation amounts to 1000.
Normally a company would issue about 100 of a 1000 shares to shareholders. This is called ‘Issued Shares’. Depending on the growth plans of a new company, it is wise to issue a limited amount to the current shareholders / investors. This leaves space for future growth. For example, if the MOI allotted 1 000 shares, the Directors should authorise only a small percentage initially – say 100 shares (10% of the total). If the two shareholders each wants 50% stake holding, each will own 50 shares. This allows the company to take on new partners easily if required in the future. The Share Certificate is basically the legal document which acts as legal evidence that a specific person owns an amount of shares in a company. Get your Share Certificates here.
If a company wants to sell shares to a new shareholder, you have to follow a legal process called a “Transfer of Shares”. If a company wants to take new shareholders / investors on board they need to process the “Allotment of Shares” which also constitutes a legal process. This process ensures the new owner that he / she legitimately owns a specific amount of shares in the applicable company, for example 250 of the 1000 authorized shares.
In case a company needs to have more authorised shares for new investors / partners after initiation, it can be increased by the process of increasing the “Authorised Shares”. For example, according to the Company’s MOI it can only authorise up to 1000. If that amount is reached and the company wants to allot another 1000, they need to increase the “Authorised Shares”.
A Shareholders Agreement is setup to protect the shareholders of a Company. It sets out the duties and rights of the shareholders and also regulates the sale of shares within the Company. If there is more than one Shareholder in a Company, it is imperative to have a Shareholders Agreement. Get your Shareholders Agreement here.
You need to keep record of the Company Directors and Shareholders from the date of registration of the Company by using a Company Register. A PDF printout form an Electronic Share Register is viewed as a legal document in court. It is the responsibility of Directors of the company to ensure the Register is always kept up to date of all changes within a company. To ensure your Register stays up to date, you can make use of our Electronic Share Register Update Product. Apply below.
Every company should have a professional (such as a lawyer, company secretary or compliance officer) update their Register to make sure it meets all legal standards. In case yours is behind or you have not setup a Share Register before, we can assist with the setup and update of your Electronic Share Register. You will pay this once-off fee and then again each time you want to update the Register in the future.
For assistance regarding your Shares, please apply below or call us toll free on 0800 007 269..
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