Post: Issuing Shares to New Shareholders: Legal and Strategic Guide

What Does It Mean to Issue Shares?

Issuing shares means creating and allocating new shares to individuals or entities. This is different from transferring existing shares between shareholders—it increases the total number of shares in the company.

Common reasons to issue new shares include:

• Onboarding a co-founder or advisor
• Raising funds from an investor
• Employee incentive schemes (e.g. EMI options)
• Business growth or capital restructuring

Step-by-Step: How to Issue Shares

1. Check the Articles of Association

Ensure your Articles allow share issuance and whether you need shareholder or board approval. If the Articles restrict it, you may need a special resolution to amend them.

2. Determine the Share Class and Rights

Decide what type of shares to issue:

• Ordinary shares (equal voting, dividends, and capital)
• Preference shares (fixed dividends, priority return)
• Non-voting or alphabet shares (for internal structuring)

We advise clients on share classes and their implications for control and dilution.

3. Pass a Board Resolution

The board must formally approve the issuance by passing a resolution. This authorises the allocation, sets the share price, and designates the recipient.

4. Complete the Share Allotment (Form SH01)

File form SH01 with Companies House within one month of issuing shares. This includes:

• Company details and share class
• Number of shares allotted
• Nominal value and amount paid
• Date of allotment

Dragonfly Associates prepares and submits this form as part of our compliance support.

5. Issue Share Certificates and Update Registers

After issuance:

• Issue a share certificate to the new shareholder
• Update the Register of Members
• Log details in the Register of Allotments

We manage all register updates and documents on your behalf.

6. Reflect Changes in the Next Confirmation Statement

Although Companies House receives SH01, changes in shareholding must still be reflected in your next Confirmation Statement (CS01). We ensure full consistency across filings.

Strategic Considerations

Issuing shares may affect:

• Control and voting rights
• Share dilution for existing members
• Valuation and investor expectations
• Future fundraising or exits

We help clients weigh up legal and strategic outcomes before finalising share issues.

Frequently Asked Questions

Can I issue shares to myself?

Yes, if you’re the sole director/shareholder and your Articles allow it. Still, formal board minutes and filings are required.

Is there tax when issuing shares?

Issuing new shares is not subject to stamp duty, but other tax implications (like income tax on under-market-value shares) may apply.

Can Dragonfly Associates manage the whole process?

Yes. We draft board resolutions, prepare SH01, issue certificates, update registers, and advise on structure—all subject to agreement.

Issue Shares with Confidence

Issuing shares is a powerful tool to grow your business—but it must be handled with care. A proper legal process avoids future disputes, protects your company’s structure, and strengthens investor confidence.

Dragonfly Associates offers full-service share issuance support—from board documentation to Companies House filings—via structured compliance packages.

To start issuing shares the right way, contact our team today.