If a company wants to allot new shares without first offering them to the existing shareholders, it will usually need to authorise the directors to disapply these pre-emption rights. Our model sets out a sample form of resolution.

Allotting shares

The Companies Act 2006 sets out pre-emption rights that require new shares to be offered to the existing shareholders before they are allotted to newcomers. If a company wants to allot new shares without following this procedure and they are not already permitted to do so by the articles or a shareholder resolution, a special resolution will need to be passed.

The pre-emption procedure can be avoided by:

• the shareholders giving the directors the authority to do so by special resolution
• disapplying the pre-emption rights in the articles (for which a special resolution to change the articles is needed); or
• using a statutory special resolution procedure.

Our model takes the first approach, as it is administratively the simplest.

Tip

If the shareholders are also passing an ordinary resolution to authorise the directors to allot shares, make sure that the expiry dates on both authorisations are the same.

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 75%. 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. This must be submitted 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.