Many companies start life with just one or two shareholders. This is typical for new company formations but you may find that the company needs to add new shareholders or change the share structure at a later date.
If you find that your company needs to add one or more new shareholders there are two options that are commonly used.
Option 1. You transfer some of the existing shares to new shareholders
If the existing shareholders were issued with more than 1 share at the time of incorporation you may choose to transfer some of the existing shares to the new shareholders. Many new companies have 100 or 1000 shares issued in the beginning.
Transferring shares from person to another is done by completing a stock transfer form. This keeps the company shares set at current levels and you simply transfer the correct amount to the new members. You can find a stock transfer form online at this link- Transferring shares in a UK company
If the shares are transferred for no money or ‘nil consideration’ then you do not have to pay stamp duty (tax) to the UK government. Once the stock transfer form is signed by both parties the transfer of shares is complete. If the new shareholders pay for the shares then stamp duty will have to be paid to the UK government. You can seek further guidance on this from HMRC.
Option 2. You issue new shares to new shareholders
Thanks to Companies House online filing system, increasing the share capital is now quite simple. When filing form SH01 online you can create new shares identical to those already in issue. Alternatively, you can create a new share class with a different name with new rights, values and currency.
In many circumstances increasing share capital is the preferred option. It provides greater flexibility when allocating shares. More information can be found here – Adding shareholders to a company
Additional steps
Leave A Comment
You must be logged in to post a comment.