16. Share capital

Abstract

This chapter assesses what share capital is. A share is an item of property that confers upon its holder rights as set out in the Companies Act 2006 (CA 2006) and the constitution. A public company must have an allotted share capital of at least £50,000, while private companies are not subject to a minimum share capital requirement. Who has the power to allot shares depends upon the type of company, the class of share being allotted, and how many other classes of shares the company has. However, shareholders generally have a right of pre-emption meaning that, when a company issues new shares, they have to first be offered to the existing shareholders. Meanwhile, a transfer of shares occurs where a shareholder sells or gifts his shares to another, while a transmission of shares usually occurs where shares pass from one person to another due to the operation of law.