Overview of a Shareholders’ Resolution to Issue Shares

What is Shareholders’ resolution to issue shares?

A Shareholders’ Resolution to Issue Shares is a resolution to be passed by the shareholders of a company to approve the allotment and issue of new shares. This document may be used for the issue of ordinary shares or preference shares.

Generally, the power to authorize allotment and issue of shares rests with shareholders. For example, if the company has a new incoming shareholder, changing the shareholding proportion of the existing shareholders.

After using this Shareholders’ Resolution to Issue Shares, remember to:

-file the relevant form to update the relevant government department or registry within the statutory time limit;
-issue and deliver new share certificates;
-and update the register of members of the company.

When should you use a Shareholders’ Resolution to Issue Shares?

-If a general meeting (i.e., a meeting of shareholders) is convened to issue shares, use a Minutes of a General Meeting to Issue Shares

-If the company has only one shareholder or the shareholders choose to pass the resolution by way of a written resolution, use a Written Resolution to Issue Shares.

What is the difference between the issue and allotment of shares?

Issue of share is a process in which companies issue shares to shareholders (these shareholders might be individuals or corporates). An allotment of shares is the division of shares between those who have applied for those shares. For instance, if a company issues 1000 shares and 100 people have applied for it, then each applicant is allotted 10 shares.

Who decides how many shares a company can issue?

Normally when a company is starting its operation, the total number of shares which it can issue is decided. However, in some cases those numbers need to be adjusted; at that time shareholders’ votes decide whether to increase or decrease the number of shares.

What is an Initial Public Offering (IPO)?

An IPO is a process of offering shares of a private company to the general public. It helps companies to raise capital from public investors. Any company who wants to get listed on an exchange can issue an IPO and those shares are traded in an open market. Many investors buy those shares in large quantities and sell them through secondary market trading.

What right do all common shareholders have over a company?

The main rights that all common shareholders have over a company are:

Voting Rights: Every shareholder has a voting right to elect the directors in the company annual meeting. If they are not able to vote physically, they can do so by using a proxy and mail in their vote.

Ownership in a portion of the company: Every shareholder has some amount of ownership in the company. However, the influence of shareholders over a company entirely depends upon the number of shares he/she acquires. They also have a claim on the portion of assets owned by the company.

Right to dividends: Dividends can be defined as the sum of money paid to shareholders by the company out of its profits. So, whenever the company makes some profit all the shareholders have the right to get the dividends out of that profit.

Right to transfer ownership: All the common shareholders have the right to sell their shares to another person according to their needs. When they sell their shares, automatically the ownership gets transferred to another person.

Right to information: Shareholders are also entitled to the right to information such as examining basic documents like company bylaws and minutes done by board meetings.

Conclusion: Shareholders’ resolution to issue shares

To conclude, every business that deals with shares need Shareholders’ Resolution to Issue Shares. Most companies will need more capital at some point of time to grow and expand their business. To do that it can either borrow a loan or issue shares. When the time comes to issue more shares, follow a standard process using Zegal’s automated document generation platform.

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