At some point many owners of successful businesses will likely consider issuing new shares in their company. 

This could be for bringing in a new business partner, raising extra funds, or simply reshuffling your ownership structure. Whatever the reason, it all starts with one process - allotting shares.

Just in case you were wondering, ‘allotting’ shares has got nothing to do with allotments in the  gardening world, so you won’t be needing a pitch-fork. Although sometimes they can be useful in shareholder negotiations. 

Let’s find out more about what allotting shares involves, and how and why to allot shares in the UK. 

What does it mean to allot shares?

Allotting shares simply means issuing new shares in a company. It’s a way of increasing the number of shares in circulation, usually to bring in new shareholders, raise funds, or give existing owners a larger stake.

This is different from transferring shares, where ownership of existing shares is passed from one person to another. With an allotment, you're creating brand new shares and deciding who gets them.

If you’re running a Limited company and want to allot shares in the UK, there are a few legal boxes to tick, but the process is pretty manageable once you know what’s involved.

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Why might a company allot shares?

There are plenty of good reasons to allot new shares. Here are some common ones:

• Raising capital – Perhaps you need investment to grow, and you’re offering shares in return.
  
  
• Bringing in a new business partner – Giving them shares formalises their role in the company.
  
  
• Rewarding employees or directors – Shares can be a great way to offer long-term incentives.
  
  
• Restructuring your company – You might want to adjust who owns what as your business evolves.

Whatever the reason, it’s important to follow the correct steps when you allot shares to avoid any legal or tax headaches later on.

Who can allot shares in a UK company?

In most private Limited companies, it’s the directors who decide whether to allot shares. But before doing anything, they’ll need to check a couple of things:

• The Articles of Association – This sets out the company’s rules. If it restricts the power to allot shares, you’ll need to get permission from the shareholders.
  
  
• Shareholder approval – If existing shareholders have pre-emption rights, they may need to be offered the new shares first. This protects their stake from being diluted without warning.

Essentially the directors usually handle the allotment, but they must follow the company’s internal rules and may need a shareholder vote first.

What kinds of businesses usually allot shares?

Allotting shares isn’t just for large corporations,  it’s actually quite common among small and growing private Limited companies, especially in the following situations:

• Startups seeking investment from friends, family, angel investors, or venture capital firms
  
  
• Small businesses bringing in new directors or partners and formalising their roles with equity
  
  
• Established SMEs reorganising their share structure for tax planning or succession purposes
  
  
• Companies offering employee share schemes as a reward or incentive

So whether you're running a one-person business or heading up a growing team, share allotments can be a useful tool for raising funds, attracting talent, or planning your company's future.

Steps to allot shares in the UK

Here’s a simple step-by-step guide to help you allot shares correctly:

1. Check your company’s Articles and any shareholder agreements‍

Make sure there’s nothing preventing you from issuing new shares. If restrictions apply, get the necessary approvals before going further.

2. Get shareholder approval (if required)‍

Depending on your setup, you may need to pass an ordinary resolution or get written consent from shareholders.

3. Hold a board meeting and record the decision‍

Directors should meet to approve the share allotment. Keep clear minutes of the meeting as part of your company records.

4. Complete and submit form SH01‍

This form notifies Companies House that new shares have been allotted. You must file it within one month of the allotment.

5. Update your statutory registers‍

You’ll need to record the new shareholding in your company’s register of members.

6. Issue share certificates‍

Each new shareholder should receive a certificate confirming their shareholding. According to the Companies Act 2006, this must be issued within two months of the allotment.

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When and how to report share allotments

Once you’ve allotted shares, there are a few admin tasks to tick off:

• File form SH01 with Companies House – This is a legal requirement and must be done within one month. You can do it online or by post.
  
  
• Update your confirmation statement – When your next one is due, make sure it reflects the new share structure.
  
  
• Keep your internal records up to date – That includes your register of members and copies of board resolutions.

Missing the filing deadline or forgetting to update your records can lead to penalties or delays down the line, so it’s worth getting everything sorted as soon as possible.

Managing your allotment - what to remember when allotting shares

Allotting shares is a useful way to raise funds, bring in new partners, or grow your business,  and it’s something that businesses of all shapes and sizes do, from startups to established SMEs. The key is making sure it’s done properly, so here’s a list of essential dos and don’ts.

Don’t:

• Forget to check your Articles of Association
  You could end up allotting shares without the proper authority, which may be invalid.
  
  
• Miss the SH01 filing deadline
  Companies House expects the form within one month. Delays can lead to penalties or future admin headaches.
  
  
• Overlook pre-emption rights
  These rights give existing shareholders the first refusal on new shares — ignoring them can cause disputes or even legal issues.
  
  
• Neglect your statutory records
  Not updating your register of members or issuing share certificates properly could land you in hot water.
  

Do:

• Hold proper board meetings
  Document decisions clearly in your board minutes and keep them with your company records.
  
  
• Get advice if you’re unsure
  Speak to your accountant, company secretary or legal advisor — especially if external investors or complex agreements are involved.
  
  
• Stay organised
  Keep your records, forms and shareholder communications tidy and accessible. Future-you will thank you!

Observing these tips will help you sort out your share allotment orderly fashion, without getting into the weeds. Meaning you’ll avoid conflict with disgruntled shareholders, and you won’t need to start swinging that pitch-fork around! Save it for HMRC!

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