Flotation

The flotation of a public company involves offering shares to the public, typically through issuing houses or financial institutions, which may underwrite the issue or place shares with investors. Shares may also be issued through rights issues to existing shareholders, preserving pre-emption rights unless disapplied. Private companies cannot offer shares to the public but may do so within limited categories under exceptions.

Pre-incorporation contracts, entered before company formation, can be ratified post-incorporation, binding the company. Promoters, responsible for forming companies, owe fiduciary duties to the company and must disclose any profits made at the company’s expense. Breaches of these duties can lead to liability for secret profits and damages.

A PLC must comply with detailed rules for issuing shares, including ensuring consideration for shares is fairly valued and disclosed. Transactions involving non-cash assets exceeding 10% of the nominal share capital require independent valuation, shareholder approval, and compliance with disclosure requirements. Breaches render transactions void and may result in liability.

Allotment of shares is contingent on meeting minimum subscription amounts, as stated in the prospectus. Non-compliance can result in repayment obligations for directors. Allotments in contravention of statutory requirements are voidable within 30 days, and legal recourse must be pursued within two years of the allotment.

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