A company's capital divides into equal units of ownership known as shares. The number of shares held in a company indicates the total stake that a shareholder has in that company.
In order to register a company, Companies House requires a Statement of Capital. Our online system submits this when you make your application.
Class of Shares e.g. Ordinary, Preference etc. | Amount paid up on each share | Amount (if any) unpaid on each share | Number of shares | Aggregate nominal value |
A ordinary shares | £1 | 0 | 100 | £100 |
B ordinary shares | £1 | 0 | 1000 | £1000 |
Class of Shares e.g. Ordinary, Preference etc. | A ordinary shares |
Amount paid up on each share | £1 |
Amount (if any) unpaid on each share | 0 |
Number of shares | 100 |
Aggregate nominal value | £100 |
Class of Shares e.g. Ordinary, Preference etc. | B ordinary shares |
Amount paid up on each share | £1 |
Amount (if any) unpaid on each share | 0 |
Number of shares | 1000 |
Aggregate nominal value | £1000 |
The Articles of Association set out the rights of shareholders: the Prescribed Particulars. The vast majority of Companies are formed using the model articles given in the Companies (Model Articles) Regulations 2008 (SI 2008/3229). These give ordinary shareholders the following rights:
There is no limit to how many classes of shares a company can issue. Each class having its own set of rights. However, any variation requires bespoke Articles of Association.
Tip: If you wish to issue multiple share classes, go to our “miscellaneous” tab at step 2 in the order process. At step 3 select the option to issue multiple share classes. Simply follow the instructions or contact support for help.
The model Articles of Association, allow shares to be issued to the founders as fully paid up, partly paid up or unpaid. Flexibility is helpful when, for instance, investors are awaiting funds before they can invest. After the initial issue, shares cannot be issued for less than their nominal value.
Shares that are issued as paid can in fact remain unpaid on the balance sheet. This simply means that the shareholder owes the company the amount for which he has subscribed e.g. £100 for 100 ordinary shares of £1. In the event that the company is insolvent and goes into liquidation, the receiver can ask the shareholder for the amount unpaid.
Tip: If you are forming a company that is not going to trade, leave the shares unpaid. That saves having to open a bank account and incurring unnecessary bank charges. We recommend this when companies are being formed simply to protect or register a name.
Limited Companies are formed to protect their owners from liability. The only obligation a shareholder has, is to settle the amount due on his shares when required. There may never be a need to pay for the shares unless the Company becomes insolvent.
When making your decision you should be aware of the following:
Tip: If you intend to issue shares to employees or other investors, it is best to issue 100 or more at the start. You will save yourself time and paperwork later on.
Tip: When two shareholders form a company with evenly allocated shares, their company is “deadlocked”. This means that neither shareholder can force a decision and the Company’s business can be impaired. Careful thought should be given to avoid this situation arising.
Tip: Single owner/manager companies often issue 1 share only. This is especially the case when the company does not need capital to start trading.
A share certificate proves the ownership of the shares described in the certificate.
It states:
Companies are required to issue certificates within 2 months of the issue or transfer.
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