How to Issue Shares in the UK: Complete Guide

To issue shares in the UK, a company must approve the allotment, update its records, and complete the required filings. Companies issue new shares to founders, existing shareholders, employees, or outside investors. A new share issue can raise capital or change company ownership. The process starts with the company’s Articles of Association. Directors should also check any Shareholders’ Agreement before approving new shares.

Directors must confirm their authority to allot shares. They must also consider pre-emption rights and any required shareholder approval. After the allotment, the company updates its Register of Members. It must normally file Form SH01 within one month.

Form SH01 includes an updated Statement of Capital. A share issue can also create or change a person with significant control. Companies must deal with those PSC changes separately from the SH01 filing. Identity-verification requirements can also apply to a new PSC.

This explains share allotment, board resolutions, Form SH01, share certificates, dilution, stamp duty, and Companies House filings. It also explains share transfers, pre-emption rights, different share classes, and shareholder approval.

What is Issue of Shares?

An issue of shares creates new company shares and gives them to a person entitled to become a shareholder. A company normally issues shares for cash or another agreed form of consideration. Issuing shares increases the company’s issued share capital. It can also change each shareholder’s percentage ownership.

Shares can carry voting, dividend, capital, and redemption rights. These rights depend on the share class and company constitution. A private limited company may issue ordinary shares, preference shares, redeemable shares, or different alphabet share classes. Alphabet shares usually use names such as A, B, or C ordinary shares. Their rights depend on the Articles of Association.

Allotment and issue have different legal meanings. A share is generally allotted when a person obtains an unconditional right to receive it. The share is then issued when that person is entered in the company’s Register of Members. Understanding this distinction is important when keeping company records up to date and preparing the relevant Companies House filings. 

What is an example of issuing shares?

A company could issue 20 new ordinary shares to an investor who contributes £20,000. Assume a company already has 100 ordinary shares. One founder owns all 100 shares. An investor agrees to invest £20,000 for 20 newly issued ordinary shares. Each share has a nominal value of £1. The company approves and allots the 20 shares. It then records the investor in its Register of Members. 

The company now has 120 issued ordinary shares. The founder owns 100 shares, equal to approximately 83.33%. The investor owns 20 shares, equal to approximately 16.67%. The £20 nominal value increases share capital. The remaining £19,980 represents the share premium. The company generally credits this amount to its share premium account. The new issue has therefore raised £20,000 while reducing the founder’s ownership percentage.

How to issue shares in the UK?

To issue shares in the UK, confirm authority, approve the allotment, update company records, and file Form SH01. Start by reviewing the Articles of Association and any Shareholders’ Agreement. These documents may restrict new shares or require shareholder consent.

Next, confirm whether the directors have authority to allot the proposed shares. Certain private companies incorporated under the Companies Act 2006 have automatic director authority in specific circumstances. This generally applies when the company will have only one share class after the allotment. The company’s articles can restrict that authority.

Older private companies may need shareholder authority before using the single-class exemption. Companies outside that position may require authority under section 551 of the Companies Act 2006. Directors must then check statutory and contractual pre-emption rights. The Board of Directors can pass the required Board Resolution once the necessary authority exists.

A shareholders’ resolution may also be necessary in some circumstances. The company then completes the allotment and records the agreed consideration. It should register the new shareholder as soon as practicable. Since 26 January 2026, companies can no longer keep their Register of Members on the Companies House central register. Companies must maintain their own Register of Members as part of their statutory company records. 

How to Buy Shares in a Company?

You can acquire shares through a new share subscription or by buying existing shares from another shareholder. A subscription involves a new company share issue. The company creates the shares and normally receives the investment money. Buying existing shares involves a share transfer instead. The selling shareholder normally receives the purchase price. The company does not create additional shares.

For example, an investor could subscribe for 100 newly issued shares for £10,000. The £10,000 would normally go to the company. Alternatively, the investor could buy 100 existing shares from a founder. The payment would normally go to that founder. Investors should check the Articles of Association before either transaction. A Shareholders’ Agreement may also contain restrictions on subscriptions or transfers.

How many shares should a new company issue?

There is no fixed number of shares that every new UK private company must issue. A simple company may start with one ordinary share. Another company may use 100 or 1,000 shares to make ownership percentages easier to divide.

For example, two equal founders could receive 50 shares each from a total of 100. Each founder would then own 50%. The number of shares matters less than their rights, nominal value, and ownership percentages. Founders should also consider future investors. A larger initial number can make smaller ownership percentages easier to allocate without fractional shares. The chosen structure should reflect the company’s commercial and ownership plans.

What is the process of issuing shares?

The issue of shares normally involves authority, pre-emption checks, approval, allotment, registration, and Companies House filing. The company first reviews its Articles of Association and Shareholders’ Agreement. Directors then confirm their authority to allot shares. They check whether existing shareholders hold statutory or contractual pre-emption rights. The company passes any required Board Resolution or shareholders’ resolution. Directors then allot the shares for the agreed consideration.

The company enters the new shareholder in its Register of Members. It prepares the relevant share certificate and updates its company records. Finally, it files Form SH01 and the updated Statement of Capital. A private limited company can generally issue shares for cash or non-cash consideration.

How to change shares on Companies House?

The Companies House filing depends on whether the company issues new shares or transfers existing shares. Use Form SH01 when the company allots new shares. A normal transfer of existing shares does not require Form SH01.

Instead, the company records the transfer in its Register of Members.  The shareholder information can then be updated through the Confirmation Statement where required. CS01 Part 4 specifically allows a non-traded company to report changes to shareholder information. A share issue can also change the company’s PSC position.

A person normally meets the share ownership condition when they hold more than 25% of the company’s shares. Other PSC conditions cover voting rights, board appointment rights, and significant influence or control.

PSC reporting and identity verification involve separate requirements. The company must tell Companies House about a change to its PSC information within 14 days of confirming the change.  A new PSC must also meet the current identity-verification requirements. A person becoming a PSC after 18 November 2025 can provide their personal code when first registered. Alternatively, they can provide it within 14 days of being added to the Companies House register. This identity-verification period is separate from the company’s duty to report PSC information.

When should you file form SH01?

Prepare Form SH01 as soon as the company completes the share allotment. Early preparation keeps Companies House records consistent with the company’s statutory records. Form SH01 reports the new allotment and the resulting share capital.

It includes the number and class of shares allotted. It also reports the nominal value and relevant payment information. A non-cash allotment requires information about the consideration received. Do not wait for the next Confirmation Statement before reporting newly allotted shares. The SH01 filing requirement arises from the allotment itself.

When must SH01 be filed with Companies House?

A limited company must deliver Form SH01 to Companies House within one month of the share allotment. The one-month period is a statutory filing deadline. For example, assume directors allot new shares on 10 September. The company should calculate its SH01 deadline from that allotment date. Several allotments can sometimes appear on the same return. Companies should avoid delaying an earlier allotment while waiting for another transaction. SH01 is an event-driven filing rather than an annual company filing.

What is share allotment?

Share allotment gives a person an unconditional right to receive particular shares in a company. Allotment and issue are different stages of the same process. An allotment occurs when the person acquires the unconditional right to the shares. The shares become issued once that person enters the company’s Register of Members.

For example, directors could allot 10 ordinary shares to a new investor. The investor gains the right to those shares through the allotment. The company then registers the investor as a member. This distinction helps explain why the allotment date and membership records both matter.

When should you issue shares?

Issue shares when new equity supports a clear funding, ownership, or commercial purpose. A company may issue shares to raise capital without taking additional borrowing. Founders may use a new issue when another person joins the business. Companies can also issue shares as part of employee equity arrangements. Existing shareholders may receive new shares through suitable rights or bonus arrangements.

However, every company share issue can affect ownership percentages. It can also affect voting rights, dividends, PSC status, and future sale proceeds. Directors should calculate those effects before completing the allotment.

What are things to consider before issuing new shares in a UK limited company?

Consider authority, pre-emption rights, dilution, share class, price, tax, records, and filing obligations before issuing shares. Start with the Articles of Association and any Shareholders’ Agreement. Confirm whether the directors have valid allotment authority. Check whether existing shareholders have pre-emption rights. Calculate ownership percentages before and after the proposed share allotment.

Choose the correct share class. Ordinary shares often carry voting, dividend, and capital rights. Preference shares may provide priority over dividends or capital distributions. Redeemable shares can include rights to redeem under agreed terms. Check whether a new share class requires amendments to the Articles. Agree the subscription price and identify any amount going to the share premium account. Finally, consider tax, PSC reporting, identity verification, and Companies House requirements.

What is the difference between issuing shares and selling shares?

Issuing shares creates new shares, while selling shares normally involves shares that already exist. The company usually receives the subscription proceeds from a new issue. The selling shareholder usually receives the money from an existing share sale.

Issuing shares increases the number of shares in circulation. Selling existing shares does not normally increase issued share capital. A new issue can dilute existing shareholders. A sale changes ownership without automatically diluting other shareholders. The required company records and tax treatment can also differ.

What is the difference between issuing and transferring shares?

Issuing creates new shares, while transferring moves existing shares from one shareholder to another. A company uses an allotment process when creating new shares. It normally reports that allotment through Form SH01.

A transfer involves shares that already exist. The company usually needs an appropriate instrument of transfer before registering the new owner. It then updates the Register of Members. A normal transfer does not require SH01 because no new shares have been allotted. Share transfers can also create different Stamp Duty consequences.

What are pre-emption rights?

Pre-emption rights give existing shareholders priority over certain new shares before outsiders can receive them. Statutory pre-emption rights mainly apply to qualifying equity securities issued for cash. They can protect existing shareholders against unwanted ownership dilution.

Suppose one shareholder owns 30% of a company. A proportionate offer can allow that shareholder to maintain their 30% holding. The Companies Act 2006 allows pre-emption rights to be excluded or disapplied in certain circumstances.

The Articles of Association can also affect the position. A Shareholders’ Agreement may create separate contractual pre-emption rights. Directors should check both company law and company documents before approving an allotment.

Can directors issue shares without shareholder approval?

Directors can issue shares without fresh shareholder approval when they already have valid authority to allot them. Certain private companies with one class of shares benefit from statutory director authority. The company’s Articles can restrict that authority.

Older companies and companies with several share classes may require shareholder authorisation. Pre-emption rights remain a separate issue. Having authority to allot shares does not automatically remove those rights.

Is Stamp Duty payable when issuing shares?

Stamp Duty and Stamp Duty Reserve Tax normally do not apply when someone subscribes for newly issued shares. HMRC distinguishes a new share subscription from buying existing shares. Stamp Duty can apply when existing shares transfer using a stock transfer form. The standard rate is 0.5% where the relevant transaction exceeds £1,000.HMRC rounds Stamp Duty on a stock transfer form up to the nearest £5.

For example, a £10,000 chargeable share transfer normally produces £50 of Stamp Duty. Electronic purchases of existing shares generally attract 0.5% Stamp Duty Reserve Tax. Separate rules, exemptions, and reliefs can apply to particular transactions.

What Is a Statement of Capital?

A Statement of Capital provides a snapshot of a company’s issued share capital at a particular date. It records the total number of issued shares and their aggregate nominal value. It also provides information for each share class. The information includes the number of shares and aggregate nominal value for each class. The statement records amounts paid and unpaid where relevant.

It also contains prescribed particulars of the rights attached to each class. These rights can include voting rights, dividend rights, capital rights, and redemption rights. This information becomes particularly important with preference, redeemable, or alphabet shares. The Statement of Capital should agree with the company’s Articles and internal share records. Companies House requires an updated Statement of Capital with Form SH01 following an allotment.