To issue shares in a UK limited company, you follow six steps: check your articles of association, confirm the directors have authority to allot, deal with pre-emption rights, pass a board resolution and allot the shares, issue share certificates, then file the SH01 form at Companies House. The whole process is governed by the Companies Act 2006, and for most private companies with one class of shares it’s straightforward.
One distinction matters before you start. Allotment means creating and issuing brand new shares, which increases the total number of shares in the company. A transfer means moving existing shares from one person to another, with no new shares created. This guide covers allotment (issuing new shares), which is what most founders actually need when bringing in a co-founder or raising money.
What Does Issuing Shares Actually Mean for a UK Ltd?
Issuing shares gives someone ownership in your company in exchange for money, assets, or other value. Each share carries rights: usually voting, dividends, and a slice of the company on a sale or wind-up.
Founders typically issue shares in three moments:
- At incorporation. You allot the first shares to yourself and any co-founders when the company is formed.
- To add a co-founder. Someone joins later and you issue them new shares.
- To raise investment. An investor puts in cash and receives newly issued shares in return.
The law that controls all of this is the Companies Act 2006. It sets out who can allot shares, when shareholder approval is needed, and what you must file. If you haven’t formed your company yet, start with our guide on how to register a company in the UK, then come back to sort out your share structure.
Step 1 – Check Your Articles of Association
Your articles are the rulebook for your company. Before you allot a single share, read what they say about issuing shares.
Most UK companies use the model articles or a light variation. These usually allow directors to allot shares freely if the company has one class of shares. But some articles, especially bespoke ones drafted for investors, restrict issuance or set out special procedures.
One class vs multiple classes
If you only have ordinary shares (one class), the process is simpler. If you have multiple classes (for example A shares and B shares with different rights), extra rules apply, which we cover in Step 2.
What to do if your articles restrict issuance
If the articles cap the number of shares or block new allotments, you’ll need to amend them first. That takes a special resolution (75% of shareholders) filed at Companies House. Check this before promising anyone shares.
Step 2 – Confirm Directors Have Authority to Allot Shares
Directors can only issue shares if they have authority to do so. Where that authority comes from depends on your setup.
Section 550 (one class of shares). If your private company has only one class of shares, the directors can allot new shares of that same class without any prior shareholder approval, as long as the articles don’t say otherwise. Most single-founder and simple co-founder companies fall here.
Section 551 (other cases). If you have multiple share classes, or your articles limit director authority, you need an ordinary resolution from shareholders (a simple majority) before allotting. This resolution can grant authority for up to five years.
Written resolutions vs general meetings
Private companies rarely hold physical meetings. A written resolution circulated to shareholders and signed off is the normal route. An ordinary resolution needs over 50% approval; a special resolution needs 75%.
Getting your ownership split right from day one saves headaches later. Our UK company shareholders guide walks through how shareholding actually works in practice.
Step 3 – Handle Pre-Emption Rights
Pre-emption rights protect existing shareholders from being diluted without a say. Under section 561 of the Companies Act 2006, new shares must first be offered pro-rata to current shareholders before anyone new can buy them.
Here’s what that means in plain terms. If you own 50% of the company and it issues new shares, you get the right to buy enough of them to keep your 50%. Only if you decline can those shares go to an outside investor or new co-founder.
How to disapply pre-emption rights
To skip this offer step, you disapply pre-emption rights with a special resolution (75% majority). Many companies do this at formation or as part of an investment round so shares can go straight to the intended person.
When existing shareholders must be offered shares first: any time you’re allotting ordinary shares for cash and haven’t disapplied pre-emption. Non-resident founders raising from a single angel investor almost always disapply first to keep things clean.
Step 4 – Pass the Board Resolution and Allot the Shares
With authority confirmed and pre-emption handled, the directors formally allot the shares. This is usually done by board resolution, either at a meeting or in writing.
The board resolution should state:
- The number of shares being allotted
- The class of shares (for example ordinary)
- The allottees (who is receiving them)
- The price per share, and
- The payment method (cash or non-cash consideration)
Shares are legally issued once the allotment is entered in the register of members. As law firm DWF puts it, “common law regards shares as issued when the allotment is recorded in the company’s register of members.” So updating that register is not optional paperwork, it’s the moment ownership takes effect.
Cash vs non-cash consideration
Shares are usually paid for in cash. But they can be issued for non-cash value too, such as intellectual property or services. Just remember: you can never issue shares below their nominal value. Issuing shares at a discount to nominal value is prohibited under the Companies Act 2006.
Step 5 – Issue Share Certificates
Once shares are allotted, you must issue share certificates to the new shareholders within two months of the allotment date. This is a legal requirement, not a nicety.
A UK company share certificate must contain:
- The company name and registration number
- The shareholder’s name
- The number and class of shares held
- The nominal value of each share and the amount paid
- A unique certificate number and the date of issue
Update the register of members
Your statutory register of members is the official record of who owns what. Add the new shareholder, the number and class of shares, and the date. Keep it up to date because it feeds your annual confirmation statement to Companies House.
Step 6 – File SH01 with Companies House
The SH01 form (Return of Allotment of Shares) tells Companies House that new shares have been issued. You must file it within one month of the allotment date.
The SH01 records how many shares were allotted, their class, nominal value, and the amount paid (or unpaid) on each. You can file it online through Companies House or by post. Miss the deadline and you commit an offence, so diarise it the moment you allot.
File any resolutions within 15 days
If you passed any special resolutions (for example to disapply pre-emption rights or amend the articles), file them at Companies House within 15 days of passing.
Update the PSC register if ownership shifts
If the allotment changes who holds 25% or more of the shares or voting rights, update your Persons with Significant Control (PSC) register and notify Companies House. New shareholders crossing that threshold become PSCs. This is easy to forget and one of the most common compliance slips.
Common Mistakes Non-Resident Founders Make When Issuing Shares
Most problems come from small procedural gaps. Here are the ones that cost founders the most.
Transferring existing shares instead of issuing new ones. This is the big one. Solicitor Jonathan Lea explains it well: “A common mistake is when founders want to offer shares to new shareholders they think to transfer existing shares. Instead they should in most cases issue a relevant number of new shares to avoid capital gains tax.” Transferring your own shares can trigger a Capital Gains Tax charge on you personally. Issuing new shares usually doesn’t.
Forgetting to file SH01 on time. The one-month clock is easy to miss when you’re busy building. Late filing is an offence.
Not checking the articles first. Allotting shares your articles don’t permit can invalidate the whole process.
Missing the PSC register update. If a new shareholder crosses 25%, you must record it. Skipping this is a compliance breach.
Issuing shares at a discount. You cannot issue shares below nominal value. If your shares have a nominal value of £1, that’s the floor.
Share Structures for Non-Resident Founders: What to Set Up at Formation
Your UK limited company share structure decides how easily you can bring in people later. Getting it right at formation saves paperwork and legal fees down the line.
1 share vs 100 shares
You can technically form with a single ordinary share worth £1. But that makes future splits awkward. If you issue 1 share and later want to give a co-founder 20%, you can’t cleanly divide one share.
Issuing 100 ordinary shares at formation is common best practice. It gives you clean percentages: 1 share equals 1%. Bringing in someone at 15% or an investor at 8% becomes simple maths. You can go higher (1,000 or 10,000 shares) for even finer control if you expect several funding rounds.
Multiple share classes at formation
Some founders set up A shares and B shares from day one, giving different voting or dividend rights. This suits teams where one founder wants control while another wants income, or where you plan structured investment. Just remember that multiple classes trigger the section 551 approval route for future allotments.
Vesting schedules for co-founders
If a co-founder joins, consider a vesting schedule so their shares earn out over time (often four years) rather than vesting instantly. If they leave early, the unvested portion can return to the company. This protects everyone if the partnership doesn’t work out.
When you form your company, the package you choose shapes how smooth this all is. LaunchPad is the budget route for non-resident founders who just need a clean UK company set up correctly. If you plan to raise or scale, ScaleUp adds VAT support, accounting, and consultations that help when your share structure gets more complex. You can compare all plans here.
For the full legal detail, the government’s own Companies House guidance on issuing shares is the authoritative reference. Rapid Formations also published a competitor guide, “Issuing shares 101: What startup founders should know,” on 31 July 2026 if you want a second view.
FAQ
Can a non-UK resident be a shareholder in a UK Ltd?
Yes. There is no residency or nationality requirement to be a shareholder in a UK limited company. You can own shares from anywhere in the world, and the same applies to being a director.
How many shares should I issue when forming a UK company?
Issuing 100 ordinary shares at formation is a common best practice because it makes future splits and dilution easy (1 share equals 1%). A single share works legally but makes bringing in co-founders or investors awkward later.
Can I issue shares for free (nil consideration)?
No. You cannot issue shares below their nominal value, so issuing them for nothing when they have a nominal value is not allowed. Shares must be paid for in cash or non-cash value at least equal to nominal value.
What is an SH01 form and when must I file it?
The SH01 (Return of Allotment of Shares) is the Companies House form that records newly issued shares. You must file it within one month of the allotment date, either online or by post.
Do I need a solicitor to issue shares?
Not always. For a simple allotment in a company with one class of shares, founders can handle it themselves following the six steps above. A solicitor is worth it for investment rounds, multiple share classes, or bespoke articles.
What happens if I miss the SH01 filing deadline?
Filing the SH01 late is an offence under the Companies Act 2006. File it as soon as you realise, and update your register of members and PSC register too if any 25% thresholds changed.
