Allotment of Shares
An issuance of shares is referred to as an allotment of shares.
In an allotment, you issue shares to existing shareholders or to third parties/non-existing members who subscribe to your company’s constitution.
Issuing shares in your company is a great way to obtain investment capital and grow your business. If you want to encourage your employees to work harder and give them a stake in your company, you can also reward them with shares.
Considerations when Allotting Shares
According to Companies Act, to initiate the allotment process, the directors must hold a general meeting to get approval from the existing shareholders. The company must file a return of allotment with the Accounting and Corporate Regulatory Authority (ACRA) through BizFile within 14 days of issuing the shares.
The following documents are usually prepared by the company secretary:
- A Director’s Resolution in Writing (DRIW) recording the allotment of shares;
- Preparation of new share certificate(s).
- The number of the shares in the allotment
- The amount (if any) paid or deemed to be paid on the allotment of each share
- The amount (if any) unpaid on each share
- The class of shares issued (if applicable)
- The full name, identification, nationality, and address (for individual shareholders)
- The corporation name or UEN, and address (for shareholders that are corporations)
- The number and class of shares held by each of its members
The Share Allotment Procedure
Approval by Existing Shareholders
While the issuance of shares is usually proposed by the board of directors, section 161 of the Companies Act stipulates that the board requires shareholder approval to issue new shares.
Hence, the board must obtain either:
- A specific mandate for that particular issuance of shares; or
- A general mandate by the general meeting authorising the Board of Directors to issue shares.
You may need to hold an Extraordinary General Meeting to seek shareholder approval before issuing the shares. When your company’s constitution stipulates any specific procedures that is required before the company may issue shares, then those procedures will have to be adhered.
The company must have the share certificate ready to be issued to the new shareholders within 60 days after the allotment of shares.
After the issuance of new Share Certificates, the company secretary will update the company’s register of allotments and register of shareholders.
How Can Tianlong Services Help You?
Tianlong Services is a professional accounting and secretarial firm and a registered ACRA filing agent for company incorporation, lodgement of annual return and filing of changes and updates of company particulars, officers and shareholders.
Contact us today if you need help with issuing shares in your company.
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