1. Why conduct an allotment of shares?

An allotment of shares might be conducted for the following reasons

• To raise money for the Company
• To introduce new investors such as BES investors, Enterprise Ireland or Enterprise Board Investors
• To convert loans to share capital
• To introduce a golden share
• To put in place a group structure
• To fund a redemption of shares
• To implement a bonus issue of shares

2. What is an allotment of shares?

Shares are allocated in a company via a process known as allotment, which involves increasing the issued share capital of the company and adding the holder to the register of members.

3. What is the process?

Once an application for shares has been made to the company the directors can, subject to the Memorandum and Articles of the Company, accept the offer to subscribe for the shares and authorise the register of members to be updated. Before considering an allotment of shares the directors of the Company must make sure there is sufficient authorised share capital to facilitate the new issue and if not arrange for it to be increased. They must also ensure that they have the authority to allot these shares and that pre-emption rights have been taken into consideration. The company secretary should arrange for the public record to be updated at the Companies Registration Office. Once all the necessary steps have been taken the share can be issued to the applicant and the relevant share certificate can be provided to the holder of the shares.

4. What are the benefits to your business?

An allotment of shares can be used to raise share capital, to give employees a stake in the company, to introduce different classes of shareholder with different rights and duties and to facilitate certain loan and investment schemes.

Should you have any questions in relation to this article or should you have any Company Law or Company Secretarial queries please contact John Murphy on 053 910 0000, [email protected]