Allotment Of Shares

A share can be described as an intangible accumulation of rights, interests and obligations. The reason companies issue shares are to allow the company raise funds to carry out its activities and make a return for its members. It also allows the ownership to change in a company.

 Allotment of shares is the formation and distribution of new shares by a company. New shares can be issued either to the new or current shareholders. Offers for shares are made on application forms provided by the company. When the application is accepted, it is called an allotment. The company offering to take shares is the same as the term “allotment”.

Share allotment is the creation and issuing of new shares, by a company. New shares can be issued to either new or existing shareholders. Share allotment can have implications for any existing shareholders share proportion. Typically, new shares are allotted to bring on new business partners.

Shares must be allotted through a board agreement. A board meeting should be held to agree any changes to your company’s share structure. Be sure to keep detailed minutes of your meeting that clearly display the revised share structure and shareholdings. These minutes will need to be kept safe with your company records, they’ll later be used when updating Companies House and also provide a solid audit trail.