Issuing shares

In this lesson

1. 0:00 Share issuance authority and classes
2. 1:15 Rights issues and pre-emption rights
3. 3:12 Bonus issues and scrip dividends
4. 4:14 Issuing shares at discount and premium
5. 6:02 Payment requirements for private companies
6. 6:21 Payment requirements for public companies
7. 7:47 Liquidation surplus distribution exam question

About this lesson

share capital accounts. This knowledge is essential for Corporate and Business Law and forms part of your broader understanding of company finance and governance. The video covers the authority to issue shares, which depends on your company structure. Private companies with a single class of shares can issue new shares freely unless restricted by their articles. However, private companies with multiple share classes and all public companies must obtain an ordinary resolution (over 50% shareholder approval) before issuing shares. Even if directors breach procedure, shares remain valid, but the company risks fines under the Companies Act 2006. You'll explore two main share issue methods. A rights issue offers new shares to existing shareholders in proportion to their holdings, with a 21-day window to exercise their right of first refusal. Shares are typically offered at a discount to market value to encourage take-up. A bonus issue distributes free shares to existing shareholders, funded from the share premium account or retained earnings, allowing shareholders to receive value without the company spending cash. The video also explains pre-emption rights and how private companies can exclude them in their articles, whereas public companies cannot. The lesson covers critical rules on share pricing and payment. Shares cannot be issued below nominal value; breaching this rule keeps the shareholder liable for the full nominal value plus interest. Premiums above nominal value must be credited to the share premium account, which has restricted uses including funding share issue costs and bonus issues. Private companies can accept non-cash consideration including services, while public companies can only accept cash and goods. Public company shares require at least one quarter of nominal value plus premium paid at issue, and any non-cash consideration must be independently valued and received within five years.

Duration: 9m