Overview of an Issue New Shares

What is a Directors’ Resolution to Issue New Shares?

A Directors’ Resolution to Issue New Shares is a resolution to be passed by the directors of a company to approve the allotment and issue of new shares. After using this Directors’ Resolution, 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.

Can a board of directors issue new shares?

There are statutory restrictions on the circumstances under which the board of directors can authorize allotment and issue of shares, e.g., when the shareholders have already approved the issue, or when the issue is proportional to the existing shareholding of the company. In other circumstances (for example, if the company has a new incoming shareholder which changes the shareholding proportion of the existing shareholders), allotment and issue of shares must be approved by shareholders.

How to implement the Directors’ Resolution to Issue New Shares?

There are two options when using a Directors’ Resolution to Issue Shares:

  • if a meeting of the board of directors is convened to issue shares, use a Board Minutes to Issue Shares; or
  • if the board resolution will be passed by way of a written resolution, use a Board Resolution to Issue Shares.

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

Issue of share is basically a process in which companies issue shares to shareholders (these shareholders might be individuals or corporates) whereas Allotment of shares is the division of shares between those who have applied for those shares. For instance, if a company issues 1,000 shares and 100 people have applied for it, then each applicant is allotted a minimum of 10 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 that wants to get listed on an exchange can issue an IPO and those shares are traded in the open market. Many investors buy those shares in large quantities and sell them through secondary market trading.

Conclusion

Every business that offers or issues shares needs a Directors’ Resolution to Issue New Shares template. It deals with the overall issuing of shares and allotting them. It can be used both for ordinary shares issuance or preference share issuance.

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