Directors need the shareholders’ authorisation to allot shares. Our model sets out a sample form of resolution.

Allotting shares

The Companies Act 2006 allows directors to allot shares in their companies, but only with the shareholders’ authorisation. If your private company was incorporated on/after 1 October 2009 and it has only one class of shares, the directors have this power automatically (unless the articles specifically restrict it). For other companies, if there is not already a valid authorisation in place, either in the articles or in a previous resolution, the shareholders will have to pass an ordinary resolution to grant this authority.

The resolution must be restricted in two ways:

• time limit: the directors can be given up to a maximum of five years to make use of the authority (it can be renewed); and
• limit the amount of shares that can be allocated: this can be any amount (there is no statutory maximum).

The resolution can also specify any conditions on the allotments that can be made, e.g. the type of shareholder, or that the allotments must be made in relation to a particular transaction, or that they can only be made for particular purposes.

Ordinary resolution

Even though this resolution may alter the articles (the directors’ original authorisation to allot is usually included in the articles), the legislation calls for an ordinary shareholder’s resolution.

Using a written resolution

This model is for a resolution to be passed using the statutory written resolution procedure. Private companies can use the written resolution procedure set out in the Companies Act 2006, or an alternative procedure set out in the articles. The model can be adapted to a company’s alternative procedure, or to be passed at a meeting.

Voting rights

The resolution needs to be passed by a simple majority (more than 50%). The default voting rights on a written resolution are that each share equals one vote. However, check the articles and share rights because they may specify different rights.

Admin

Once the deadline has passed, count the votes. If the resolution has been passed, it needs to be filed at Companies House within 15 days of the resolution being passed. You also need to keep a copy of the resolution and its result with your company books.