A guide to share capital for private and public companies
This article is an introductory guide to share capital, which is an extensive topic. Please visit us if you need
Shareholders agreements or any kind of Company legal documents.
This article explains the basics of share capital. It will be useful reading for all shareholders and directors
associated with companies incorporated in England, Wales or Scotland with a share capital, whether private or
public. The article tells you what information must be delivered to Companies House; and explains the law
surrounding authorised share capital, allotment and cancellation of shares; types of shares, restructuring share
capital and share transfer.
For more on types on shares and share transfer, please see our article Owning shares.
Share capital and authorised capital
When a company is formed, it must be decided whether its members' liability will be limited by shares. The
memorandum of association will state:
The amount of share capital the company will have, and;
The division of the share capital into shares of a fixed amount.
The members must agree to take some, or all, of the shares. The memorandum of association must show the
names of the people (subscribers) who have agreed to take shares and the number of shares each will take.
Authorised capital is the amount of share capital stated in the memorandum of association.
Is there a maximum and minimum share capital?
For private limited companies, no. However, a public limited company must have an authorised share capital of at
least £50,000 (and, if it is trading, issued capital of £50,000).
Can a company alter its authorised share capital?
A company can increase its authorised share capital by passing an ordinary resolution (unless its articles of
association require a special or extraordinary resolution). A copy of the resolution - and notice of the increase on
Form 123 - must reach Companies House