Companies Act 2006 - private company share issues

Is it in force?

All provisions on this page are in force from 1 October 2009.

Does a company need to have a nominal share capital?

No. New companies will generally not have one. If an existing company has (because of its articles or a pre-Act memorandum of association), it will act as a ceiling for the number of shares that can be allotted.

Shares still have a nominal value (par value). It's possible to change the currency of the nominal value.

Do the directors still need shareholders’ authority to allot shares?

Where there is only one class of shares in a private company, and no restriction in the articles, directors are able to issue an unlimited number of shares. The need for five-year authorities is abolished in this case but it remains for public companies and all companies with more than one class of shares.

Do pre-emption rights still apply on allotment?

Yes, on cash issues unless disapplied in the articles or an exemption applies (e.g. shares under an employee share scheme). This is largely unchanged.

Recommended action

Review articles of association before October 2009, to make sure the balance between directors' powers and shareholders' rights is correct; consider pre-emption rights.