A share issue is used to introduce new capital into a company.
As a business expands, its requirements for funds can be expected
to increase beyond those originally contributed by the
shareholders. When a company wishes to raise more capital for its
business the law on offering securities must be considered.
Under the Companies Act 1993 all new shares that will rank
equally with or prior to shares already issued by the company must
be offered pro-rata to existing shareholders, subject to any
provision in your company's constitution. This is called
If you are considering having a company constitution, you should
consider as to whether or not to cancel out pre-emptive rights in
the constitution. This is more applicable especially where your
company has many shareholders.
Transfer of Shares
A transfer of shares is the act of changing a share from one
owner to another. Subject to your company's constitution, shares in
a company may be transferred by entry of the name of the purchaser
on the share register. For a transfer to be completed, a form of
transfer signed by the present holder of the shares must be
delivered to the company or the agent of the company who maintains
the share register of the company.
Under the Companies Act 1993 there are no pre-emptive rights on
the transfer of shares in a company, unless it is prescribed in the
company's constitution. This means you have the right to sell your
shares to any party whether or not they are an existing shareholder
of the company. However, if your company you hold shares in has a
constitution, you should first check the company's constitution to
know what restrictions there are on selling your shares (if
If you are issuing more shares in your company or are buying or
selling shares in a company, please contact us for advice.