When is share capital issued?

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1.32K viewsCorporate Law

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Richeson 0 Comments

Do you know what are the procedures that need to be followed for a company to issue shares? When can a company issue shares?

2 Answers

score 0 · Answer 1 · 2012-12-02T23:05:52+00:00

When a company is formed, a capital contribution will need to be made (debit bank and credit share capital). This is the first capital issue. A company can subsequently issue more capital and the law says that the directors can issue share capital without a resolution if there is only one class of shares. If there is more than one class, then a special resolution will be needed.

score 0 · Answer 2 · 2013-04-21T09:36:43+00:00

Share capital is also issued when the company wishes to raise additional money (to fund new projects for example or to repay debt with new capital).

If the company issues new shares though, the control for the existing shareholders might be diluted as the holding can change.