Altering Share Issue Terms: Approval and Deed of Variation?

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Published by a ��ɫ�� Corporate expert

Published on: 20 December 2016

Is it possible to alter the terms of issue of shares (eg payment terms for partly paid shares) and, if so, is shareholder approval or a deed of variation required?

The answer to this question will depend on a number of factors and circumstances that will be specific to each situation, including the status of the company, whether the partly paid shares in question constitute a separate class of shares and whether there are other holders of partly paid shares whose payment terms are not proposed to be changed, as well as on the provisions of a company’s articles and any relevant shareholders’ agreement.

Companies Act

It is worth starting out with section 581 of the Companies Act 2006 (CA 2006), which applies to both public and private companies, and states that:

'A company, if so authorised by its articles, may…make arrangements on the issue of shares for a difference between the shareholders in the amounts and times of payment of calls on their shares.'

For further information see Practice Note: Allotment and issue of shares—private companies with more than

Jurisdiction(s):

United Kingdom

Key definition:

Issue of shares definition

What does Issue of shares mean?

(a) references (however expressed) to an issue of shares in any company are to such of the shares in the company as are of the same class and issued on the same day, and (b) references (however expressed) to an issue of shares in any company to an individual are to such of the shares in the company as are of the same class and are issued to the individual in one capacity on the same day.

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