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Share issues by private companies

26 Mar 2017

Private companies are prohibited by s.755 CA 2006 from issuing shares to the public, or any section of the public. ‘Any section of the public’ is widely interpreted and can apply to any group of people, however few. Even the company’s own shareholders are treated as a section of the public for this purpose.

There are some specific exemptions from s.755 CA 2006. Unless one of these applies, the company would only be allowed to issue shares to the public if it is converted into a PLC. It would then have to comply with all the regulatory requirements for a PLC, including a minimum paid-up share capital of £50,000.

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The information in this guidance is intended for general information purposes only and does not constitute legal or professional advice. The IoD does not accept any responsibility for any loss which may arise from relying on information contained in this article. It is not a substitute for legal advice and specific and personal legal advice should be taken on any individual matter. IoD does not recommend any firms. The IoD is not accountable for the products, services, acts or omissions on the website(s) linked to this page. Website terms and conditions apply.

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