Allotment of Shares: How to Issue New Shares and File SH01

Allotting shares means creating and issuing new shares in your company — for example to bring in an investor, reward a co-founder, or restructure ownership. It's different from a share transfer, where existing shares change hands. An allotment increases the total number of shares in issue.

The process is governed by the Companies Act 2006, and it has a strict filing deadline that catches a lot of small companies out. Here's how to do it properly.

Step 1: Check the Directors Have Authority to Allot

For a private company with one class of shares incorporated on or after 1 October 2009, the directors generally have authority to allot shares automatically under section 550 of the Companies Act 2006 — unless the company's articles say otherwise. This covers most small owner-managed companies. (Companies incorporated under the older 1985 Act don't get section 550 automatically — the members must first pass an ordinary resolution adopting it.)

If the company has more than one class of shares, the directors need authorisation to allot — either in the articles or by an ordinary resolution of the members under section 551. Check your articles before you allot; if authority is needed and missing, pass the resolution first.

Step 2: Deal With Pre-Emption Rights

Pre-emption rights mean existing shareholders must usually be offered new shares first, in proportion to their existing holdings, before the shares can be offered to anyone else (sections 561–562 of the Companies Act 2006).

You can disapply pre-emption rights — but doing so requires a special resolution of the members (75% majority) under section 569 (for companies with one class of shares) or section 570/571 more generally. In a single-shareholder company this is a formality, but the resolution still needs to exist. See our board resolution template guide for the wording.

Step 3: Pass the Board Resolution and Issue the Shares

Once authority and pre-emption are dealt with, the directors pass a resolution allotting the shares — recording the number of shares, the class, the price (including any premium), and to whom they're allotted. This is a board decision, recorded in a written board resolution.

Step 4: Issue Share Certificates

You must issue share certificates to the new shareholders within two months of allotment (section 769 of the Companies Act 2006). The certificate is the shareholder's evidence of title — you can produce a compliant one with our free share certificate generator.

Step 5: File the SH01 Return Within One Month

This is the step most companies miss. Under section 555 of the Companies Act 2006, you must deliver a return of allotment (form SH01) to Companies House within one month of the allotment.

The SH01 records the shares allotted, the class, the amount paid and unpaid on each share, and the resulting statement of capital. The deadline is strict — there is no mechanism to apply for an extension, and failure to file on time is an offence for which the company's officers can be fined.

File the SH01 online through Companies House WebFiling. Diarise the one-month deadline the moment you allot.

Step 6: Update Your Register of Members

Finally, update your register of members to record the new shareholding. This remains the one statutory register companies must keep locally after the ECCTA reforms. Record the shareholder's name and address, the number and class of shares, the amount paid, and the date they were entered as a member.

A Quick Worked Example

A two-director company with one class of ordinary shares wants to issue 100 new ordinary shares to a new investor for £1 each:

1. Directors have automatic authority to allot (one share class, s.550) — no members' resolution needed for authority.
2. Pre-emption rights: the existing shareholders agree to waive them by special resolution (or the investor is offered shares after pre-emption is satisfied).
3. Directors pass a board resolution allotting 100 ordinary shares at £1 to the investor.
4. A share certificate is issued to the investor within two months.
5. Form SH01 is filed at Companies House within one month, with the updated statement of capital.
6. The register of members is updated to show the new holding.

Common Mistakes

Missing the one-month SH01 deadline. The single most common error. Unlike accounts filing, there's no extension available — the clock starts on the date of allotment.

Ignoring pre-emption rights. Allotting to a new investor without offering existing shareholders first (or properly disapplying pre-emption) can make the allotment challengeable.

Forgetting the register of members. The SH01 updates Companies House, but your own register of members is a separate statutory record that must also be updated.

Confusing allotment with transfer. Issuing new shares (allotment, SH01) is not the same as moving existing shares between people (transfer, stock transfer form J30). They have different forms and different rules.

How CompanyMinder Will Help

CompanyMinder is being built to guide you through the full allotment workflow — checking your authority to allot, generating the board resolution and any pre-emption disapproval, producing the share certificate, pre-populating the SH01 with the correct statement of capital, and updating your register of members — so the one-month deadline doesn't catch you out. The goal is to turn a multi-step paper process into a guided few-minute task.

Sources

• Companies Act 2006, s.550 — Power of directors to allot shares (private company with single class)
• Companies Act 2006, s.551 — Power of directors to allot shares: authorisation by company
• Companies Act 2006, s.561 — Existing shareholders' right of pre-emption
• Companies Act 2006, s.555 — Return of allotment by limited company
• Companies Act 2006, s.769 — Duty of company as to issue of certificates
• GOV.UK — Form SH01: Return of allotment of shares