Like all company decisions, the decision to issue new shares has to first be decided by the Board of Directors (see THIS article for more information on understanding the basic company structure.) If the board vote in favour (by a majority vote) then the process can continue. Before issuing any new shares, the board must first have the authority to do so. This authority can either come from existing permissions contained within the company’s articles of association or direct from a vote of the shareholders or through default provisions in the Companies’ Act. If a company only has one class of shares, and its articles allow it, then it can issue new shares simply via a board decision. However, if the company articles don’t specific allow the board to do this (and standard model articles do not carry such provisions) then the board is not permitted to issue shares without first obtaining the consent of the shareholders through an ordinary resolution (i.e. a vote passed by more than 50% of the shareholders.) Even if the directors have the right to issue new shares, they may not be permitted to do so if there are pre-emption rights in place which require any new shares to be first offered to existing shareholders before being issued to third parties. If pre-emption rights exist, either in the company’s shareholders agreement, or under its Articles of Association or under statutory rules under the Companies Act, the company will either need to go through the process of offering the shares to existing shareholders or ask the existing shareholders to waive their pre-emption rights. Once all the relevant permissions have been obtained, the board can issue shares to new shareholders. A shareholder must pay a minimum subscription price which is the nominal value of the shares, although the company can also charge any additional sum on top of the nominal value (called the premium) which is paid by the shareholder to subscribe for the shares. The shareholder should also be given a share certificate as evidence that they now own the shares, although legally, the main evidence of a shareholding is found in the company’s share register, which it has to maintain by law. The issuance of new shares is reported to Companies House via form SH01. However, this form actually just records the total number of new shares issued, not the details of the new shareholders. So, new shareholders will not appear on the record at Companies House until the company either files its annual return or confirmation statement. If shareholders are concerned and want to see their shareholding registered on Companies House, the company can ask Companies House for an early filing of its annual return and can register the new shares at that point.