How do people get shares in a company?
Incorporation Services Limited provides an expert
service for all your company formation and company law requirements, including
advice about share allotments and transfers.
Shares can be acquired either directly from the company itself or from an existing
shareholder.
Acquisition from the company
When shares are created they are 'allotted' or 'issued' to those people or other
companies who become the company's shareholders.
(The terms 'allot' and 'issue' are often used interchangeably. In some cases,
particularly when shares are created by a public company, there may be a difference.
Allotment, strictly, is the allocation of the right to certain shares to particular
applicants for them. Such 'allottees' may be sent allotment letters (which may
be renounceable in favour of others), and the actual issue of the shares occurs
later. In most private companies allotment and issue will be the same process.)
Allotments are made by the directors, but there are various statutory rules
and procedures which must be complied with, as well as any provisions in the
company's memorandum and articles. (See related topic: How
are shares allotted (issued)?)
In private companies the allotment will be a private arrangement between the company and those who invest in it. A public company may make the issue through the Stock Exchange or on the Alternative Investment Market.
Acquisition from an existing shareholder
Subject to such restrictions as appear in the company's memorandum and articles,
a shareholder may sell his or her shares to another person or give them away.
A sale or gift will be a transfer of the shares (see related topic: How
are shares transferred?).
If a shareholder dies, there is said to be a 'transmission' of the shares (see
related topic: What happens if a shareholder dies?)
Incorporation Services Limited provides an expert
service for all your company formation and company law requirements, including
advice about share allotments and transfers.
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