Allotment
Shares in a company may be allotted on formation or subsequently, generally following a contractual process involving application, acceptance, and registration in the company’s register of members. Private companies (LTDs) cannot invite the public to subscribe for shares or list them on an exchange, except under specified exemptions, such as offers to qualified investors or limited numbers of individuals. Public companies can offer shares to the public, subject to additional regulatory requirements.
The directors are generally authorised to allot shares, subject to shareholder approval or the company’s constitution. They must act in good faith and ensure that the allotment is in the company’s best interests. Shareholders have statutory pre-emption rights, allowing them to purchase new shares proportionate to their holdings to avoid dilution. These rights can be modified or disapplied by a special resolution or the constitution.
Shares may be issued for cash, non-cash consideration, or other value, with directors determining the appropriate terms. Public companies face stricter regulations, including independent valuation of non-cash consideration. Returns detailing allotments must be filed with the Companies Registration Office. Rights attached to shares, if varied or not specified in the constitution, must also be registered. Failure to comply with these requirements may result in penalties.
Read a detailed Article on this subject with the Legislation and Cases, browse Irish Legal Guide or Contact Us for advice below.