• CHAPTER 2 CHAPTER 2 ALLOTMENT OF SHARES: GENERAL PROVISIONS

    • Power of directors to allot shares

      • 508. Exercise by directors of power to allot shares etc

        (1) The directors of a company must not exercise any power of the company—
        (a) to allot shares in the company, or
        (b) to grant rights to subscribe for, or to convert any security into, shares in the company,
        except in accordance with section 509 (private company with single class of shares) or section 510 (authorisation by company).
        (2) Subsection (1) does not apply—
        (a) to the allotment of shares in pursuance of an employees' share scheme, or
        (b) to the grant of a right to subscribe for, or to convert any security into, shares so allotted.
        (3) Subsection (1) does not apply to the allotment of shares pursuant to a right to subscribe for, or to convert any security into, shares in the company.
        (4) A director who knowingly contravenes, or permits or authorises a contravention of, this section commits a contravention of these Regulations.
        (5) A person who commits a contravention of this section is liable to a level 2 fine.
        (6) Nothing in this section affects the validity of an allotment or other transaction.

      • 509. Power of directors to allot shares etc: private company with only one class of shares

        Where a private company has only one class of shares, the directors may exercise any power of the company—

        (a) to allot shares of that class, or
        (b) to grant rights to subscribe for or to convert any security into such shares,

        except to the extent that they are prohibited from doing so by the company's articles.

      • 510. Power of directors to allot shares etc: authorisation by company

        (1) The directors of a company may exercise a power of the company—
        (a) to allot shares in the company, or
        (b) to grant rights to subscribe for or to convert any security into shares in the company,
        if they are authorised to do so by the company's articles or by resolution of the company.
        (2) Authorisation may be given for a particular exercise of the power or for its exercise generally, and may be unconditional or subject to conditions.
        (3) Authorisation must—
        (a) state the maximum amount of shares that may be allotted under it and the minimum issue price for those shares, and
        (b) specify the date on which it will expire, which must be not more than five years from—
        (i) in the case of authorisation contained in the company's articles at the time of its original incorporation, the date of that incorporation,
        (ii) in any other case, the date on which the resolution is passed by virtue of which the authorisation is given.
        (4) Authorisation may—
        (a) be renewed or further renewed by resolution of the company for a further period not exceeding five years, and
        (b) be revoked or varied at any time by resolution of the company.
        (5) A resolution renewing authorisation must—
        (a) state (or restate) the maximum amount of shares that may be allotted under the authorisation or, as the case may be, the amount remaining to be allotted under it, and
        (b) specify the date on which the renewed authorisation will expire.
        (6) In relation to rights to subscribe for or to convert any security into shares in the company, references in this section to the maximum amount of shares that may be allotted under the authorisation are to the maximum amount of shares that may be allotted pursuant to the rights.
        (7) The directors may allot shares, or grant rights to subscribe for or to convert any security into shares, after authorisation has expired if—
        (a) the shares are allotted, or the rights are granted, in pursuance of an offer or agreement made by the company before the authorisation expired, and
        (b) the authorisation allowed the company to make an offer or agreement which would or might require shares to be allotted, or rights to be granted, after the authorisation had expired.
        (8) A resolution of a company to give, vary, revoke or renew authorisation under this section may be an ordinary resolution, even though it amends the company's articles.
        (9) Chapter 3 of Part 3 (resolutions affecting a company's constitution) applies to a resolution under this section.

    • Prohibition of discounts etc.

      • 511. General prohibition of commissions, discounts and allowances

        (1) Except as permitted by section 512 (permitted commission), a company must not apply any of its shares or capital money, either directly or indirectly, in payment of any commission, discount to an issue price or allowance to any person in consideration of his—
        (a) subscribing or agreeing to subscribe (whether absolutely or conditionally) for shares in the company, or
        (b) procuring or agreeing to procure subscriptions (whether absolute or conditional) for shares in the company.
        (2) It is immaterial how the shares or money are so applied, whether by being added to the purchase money of property acquired by the company or to the contract price of work to be executed for the company, or being paid out of the nominal purchase money or contract price, or otherwise.
        (3) Nothing in this section affects the payment of such brokerage as has previously been lawful.

      • 512. Permitted commission

        (1) A company may, if the following conditions are satisfied, pay a commission to a person in consideration of his subscribing or agreeing to subscribe (whether absolutely or conditionally) for shares in the company, or procuring or agreeing to procure subscriptions (whether absolute or conditional) for shares in the company.
        (2) The conditions are that—
        (a) the payment of the commission is authorised by the company's articles, and
        (b) the commission paid or agreed to be paid does not exceed—
        (i) 10% of the price at which the shares are issued, or
        (ii) the amount or rate authorised by the articles, whichever is the less.
        (3) A vendor to, or promoter of, or other person who receives payment in money or shares from, a company may apply any part of the money or shares so received in payment of any commission the payment of which directly by the company would be permitted by this section.

    • Registration of allotment

      • 513. Registration of allotment

        (1) A company must register an allotment of shares as soon as practicable and in any event within two months after the date of the allotment.
        (2) If a company fails to comply with this section, a contravention of these Regulations is committed by—
        (a) the company, and
        (b) every officer of the company who is in default.
        (3) A person who commits a contravention of this section is liable to a level 2 fine.
        (4) For the company's duties as to the issue of share certificates etc, see Part 20 (certification and transfer of securities).

      • 514. Return of allotment by limited company

        (1) This section applies to a company limited by shares, but shall not apply to a restricted scope company.
        (2) The company must, within 28 days of making an allotment of shares, deliver to the Registrar for registration a return of the allotment.
        (3) The return must—
        (a) contain the prescribed information, and
        (b) be accompanied by a statement of capital.
        (4) The statement of capital must state with respect to the company's share capital at the date to which the return is made up—
        (a) the total number of shares of the company,
        (b) the aggregate issue price of those shares,
        (c) for each class of shares—
        (i) prescribed particulars of the rights attached to the shares,
        (ii) the total number of shares of that class, and
        (iii) the aggregate issue price of shares of that class, and
        (d) the amount paid up and the amount (if any) unpaid on each share.

      • 515. Return of allotment by unlimited company allotting new class of shares

        (1) This section applies to an unlimited company that allots shares of a class with rights that are not in all respects uniform with shares previously allotted.
        (2) The company must, within one month of making such an allotment, deliver to the Registrar for registration a return of the allotment.
        (3) The return must contain the prescribed particulars of the rights attached to the shares.
        (4) For the purposes of this section shares are not to be treated as different from shares previously allotted by reason only that the former do not carry the same rights to dividends as the latter during the 12 months immediately following the former's allotment.

      • 516. Offence of failure to make return

        (1) If a company makes default in complying with—
        (a) section 514 (return of allotment of shares by limited company), or
        (b) section 515 (return of allotment of new class of shares by unlimited company),
        a contravention of these Regulations is committed by every officer of the company who is in default.
        (2) A person who commits a contravention as described in subsection (1) is liable to a level 2 fine.
        (3) In the case of default in delivering to the Registrar within 28 days after the allotment the return required by section 514 or 515
        (a) any person liable for the default may apply to the Court for relief, and
        (b) the Court, if satisfied—
        (i) that the omission to deliver the document was accidental or due to inadvertence, or
        (ii) that it is just and equitable to grant relief,
        may make an order extending the time for delivery of the document for such period as the Court thinks proper.

      • 517. When shares are allotted

        For the purposes of these Regulations shares in a company are taken to be allotted when a person acquires the unconditional right to be included in the company's register of members in respect of the shares.

      • 518. Provisions about allotment not applicable to shares taken on formation

        The provisions of this Chapter have no application in relation to the taking of shares by the initial shareholders on the formation of the company.