Sole director resolution approving the issue of further ordinary shares
- Issues new ordinary shares
- Designed specifically for a company with only one director
- Compliant with Companies Act 2006 and the model articles of association
This is a sole director resolution, for use by a company with only one director to issue new shares. The resolution will be passed as soon as it is signed by the relevant director.
The precise approvals your company must provide in order to issue new shares will depend on a range of factors, including:
- to whom you are issuing shares;
- the terms of your company’s articles of association and any shareholders’ agreement;
- whether you are issuing shares for cash;
- the number and value of the shares you are issuing;
- the rights attached to the shares you are issuing.
In most cases, however, you will need both director and shareholder approval to issue new shares. This sole director resolution contains the necessary director approval to issue new ordinary shares for cash. Unless you are issuing these shares only to your existing shareholder(s) in proportion to their existing shareholdings, or you have already offered these shares to your existing shareholder(s), you will also need to pass a shareholder resolution to enable you to complete the share issue. This is to prevent your existing shareholder(s) from having their shareholdings unfairly diluted.
This sole director resolution is drafted for a company with model articles of association. If your company has modified articles of association, or a shareholders’ agreement, you may be required to follow a different process in order to issue new shares. You should therefore check the terms of any modified articles or shareholders’ agreement before using this template.
If your company has more than one director, you should not use this sole director resolution to issue new shares. Instead, you should use the template board minutes or written board resolution.
Q&A
When should I use this document?
You should use this sole director resolution if your company has only one director and:
- your company has the model articles of association (and only one class of ordinary shares);
- you are issuing further ordinary shares;
- the shares are being paid for in cash; and
- you have offered the new shares to your existing shareholder(s) in proportion to their existing shareholdings, or are passing the necessary special resolution to remove this requirement. This is to ensure your existing shareholder(s) do not have their shareholdings unfairly diluted by the share issue.
If your company has modified articles, or a shareholders’ agreement, you should check the terms of each document before using this template, to identify whether a different process should be followed in order to issue new shares. This template also presumes your company is not subject to any other third-party restrictions, such as restrictions from a lender or secured creditor, on being able to issue new shares.
What does this document cover?
This document contains resolutions of a sole director to:
- approve the issue of new shares; and
- attend to various practical matters arising after the issue of new shares (including issuing a share certificate, updating the company’s registers and making the necessary Companies House filing).
Why do I need this document?
You need this document to follow the correct legal process and obtain the necessary approvals before issuing new shares. Using this resolution will demonstrate that the correct process was followed. Failing to follow the correct process can lead to a share issue being void and/or you having to compensate shareholders who are adversely affected.
Where can I find out more?
For further guidance on issuing new shares, including detailed explanations of the practical and legal steps you should take in order to issue new shares, see Issuing new shares.
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