Playbook: Allot new shares

When you meet it

A company brings in a new investor, issues shares to a co-founder, or converts a loan into equity — any time new shares are created and allotted rather than existing shares changing hands, it is a share allotment.

Legal basis

Under section 161 of the Companies Act 1967, directors may not allot or issue shares without the prior authority of members, given by ordinary resolution or a general mandate; an allotment made without that authority may be void (the Panweld line of cases). [To be confirmed by counsel — the exact void sub-clause is unconfirmed; this is general information, not legal advice.]

Where the constitution requires it, the directors approve the allotment by board resolution. Under the Constitution of the Company (adopted under the Companies (Model Constitutions) Regulations 2015), a directors' resolution in writing signed by all directors for the time being is as valid as one passed at a duly convened board meeting — the authority for this is the constitution (Model Constitution reg 71 by default), not a Companies Act section. [Verified]

If members' authority needs to be obtained (or refreshed) for the allotment, a private company may pass that members' resolution by written means under sections 184A–184G of the Companies Act 1967; it is passed on the date the last required member signs (s184D). [Verified]

The return of allotment is an event-driven ACRA filing, generally lodged within 14 days of the effective date.

If the new shares create a controller holding 25%+ of the company, the register of registrable controllers also needs updating — see the RORC note below.

The standard steps (offline)

• Check whether the directors already have a general mandate to allot, or whether a members' ordinary resolution is needed first (section 161 — confirm with counsel if in doubt).
• Pass the board resolution approving the allotment (in writing, under the constitution, or at a duly convened meeting).
• If needed, pass the members' resolution granting or confirming authority — in writing under sections 184A–184G, or at a general meeting.
• Issue the shares and update the register of members.
• Lodge the return of allotment with ACRA, generally within 14 days of the effective date.
• Check whether the allotment creates a registrable controller (25%+); if so, update the internal register and lodge with ACRA's central RORC register.

Before you start — prerequisites, materials & parties

• Prerequisites: the client's CDD is passed; the allottee's CDD is run if they are new to the company; the current register of members and share capital; and a check of whether the directors already hold authority (a general mandate) to allot, or whether a members' resolution is needed first (section 161 — to be confirmed by counsel).
• Materials: the number and class of shares, the issue price / consideration, any pre-emption waiver from existing members, and — for non-cash consideration — a description/valuation of what is being given for the shares.
• Parties: the allottee, the directors (who approve the allotment), the members (who grant or refresh authority, and who may hold pre-emption rights), and ACRA (the return of allotment).

Common pitfalls & edge cases

• Allotting without members' authority. The headline risk (section 161): directors may not allot without prior authority from members, and an allotment made without it may be void. Confirm the mandate exists — or pass the members' resolution first — before issuing.
• Pre-emption rights ignored. Existing members often have a right of first refusal on new shares under the constitution. Allotting to a new investor without offering to (or getting a waiver from) existing members can breach that right.
• Diluting a controller across the 25% line — RORC. A new allotment can create or remove a registrable controller. If it does, the register of registrable controllers must be updated within its tight deadlines — see the RORC playbook.
• Non-cash consideration not documented. Shares issued for services, IP, or a loan conversion need the non-cash consideration properly described and, where relevant, valued — not just recorded as if cash was paid.
• Confusing allotment with transfer. An allotment creates new shares (no stamp duty on issue); a transfer moves existing shares (stamp duty applies). Using the wrong scenario mishandles both the register and the duty.
• Exceeding an authorised limit. If the mandate to allot is capped (by number or time), issuing beyond it is unauthorised. Check the mandate's limits before relying on it.

Timing & sequence

• Confirm authority to allot (or pass the members' resolution first) → clear pre-emption → pass the board resolution and issue the shares → file the return of allotment with ACRA (generally within 14 days) → update the register of members and share capital → update RORC if a 25%+ controller is created or removed.
• Members' authority comes before the board allotment; the ACRA return of allotment follows the issue. No stamp duty applies on a fresh issue (unlike a transfer).

In CorpSec AI

The workflow surfaces the authority question up front so it is not missed.

1. Create the taskIn the left panel click + New task, choose the company, and pick the share-allotment task type. Name the allottee, the number and class of shares, and the consideration.
2. Check authority to allotCorpSec AI flags whether directors need members' authority to allot under section 161 before drafting anything. This is general information, to be confirmed by counsel — not legal advice.
3. Let the AI draft the resolutionsThe AI drafts the board resolution (and the members' resolution, if authority needs to be obtained or refreshed) in the Document tab. Select text and comment to adjust wording.
4. Four-eyes approvalThe approval step routes the resolutions to a different, suitably senior colleague before signing.
5. Collect signaturesThe Signing tab creates a signing link per signatory. Track Signed/Pending and remind anyone outstanding.
6. File the return of allotment (within 14 days)The filing step records the lodgement of the return of allotment with ACRA, deadline-aware from the effective date.
7. Update the register (and RORC if needed)The data-update step updates the register of members and share capital. If the allotment creates a 25%+ controller, open the Compliance tab to run beneficial-ownership screening and update the registrable-controllers register. Once every step is done the task status flips to Done automatically.