Allotment of Shares

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| Sinead Gortland

The allotment of shares plays a crucial role in the growth and development of companies. Understanding the intricacies of this process is essential for both investors and business owners alike. This blog delves into the various aspects of share allotment, providing valuable insights and practical advice for those involved in the process while providing an overview of key points and shedding light on the importance of share allotment and its implications for businesses and investors.

Shares can only be allotted by a company if it is authorised by:

  • The constitution of the company; or
  • By ordinary resolution; and
  • There must be sufficient authorised but unissued shares in the Company; and
  • They must be allotted by the directors (unless the constitution states otherwise)

There is no time limit to which the authority to allot shares applies as was previously the case under the old Companies Acts. Therefore it can be given for an indefinite period (unless the company constitution or ordinary resolution states otherwise).

Pre‐emption rights on an allotment may arise by statute or under the company’s Constitution. Section 69(6) of the Companies Act 2014 gives existing members of a private company a statutory pre‐emption right in proportion to their existing holding on an allotment of new shares of that class. These pre-emption rights may however be ousted by the Constitution. A pre‐emption right is basically a right of first refusal. The company must offer the shares to the existing shareholders 14 days before any shares are allotted to any other party. The existing members of that class of shares can request that the shares be issued to another party on that member's behalf.

The constitution of a private company may exclude the statutory pre‐emption right. Where the statutory pre‐emption right is not excluded in the constitution, a special resolution may exclude the section in respect of a particular allotment.

Pre‐emption rights are not given:‐

  • to allotments for non-cash consideration (e.g. bonus shares).
  • If the Constitution exclude the operation of Section 69(6).
  • the allotment is in respect of the employee share scheme.

It is important to note that shares may not be issued at a discount. Shares may be issued for cash or non‐cash consideration.

In addition, shares may be issued at a premium. It is possible to issue partly paid shares, this occurs where payments by instalments are proposed or part of the consideration is to be left unpaid until called in by the Directors.

Where shares are allotted, the company must file a form B5 (return of allotments) with the Companies Registration Office.

If shares are issued at a premium then the amount paid, which is in excess of the nominal amount of the shares is credited to the share premium account unless the provisions of Section 72 (where the shares are issued as part of a merger – occurs where the company issues shares in itself in return for receiving shares in another company) or Section 73 (where the shares are issued as part of a group reconstruction) or Section 75 (occurs where the company issues shares in itself in return for receiving shares in another company such that that company has a wholly owned subsidiary after the transaction) apply in which case the premium would not form part of the capital of the company. In this case, the excess would be credited to another reserve (which could possibly be called a merger reserve) which would be considered to be a distributable reserve.


The allotment of shares is very common and as such is applicable to all companies.


Where ordinary shares are issued at an amount less than market value, incorrectly assuming there are no tax consequences where it alters the ownership structure of the company (i.e. it changes the percentage holdings). In this situation, the value of the company has shifted such that for CGT purposes the holder of the shares prior to the issuance is deemed to have part disposed of those shares thereby triggering a capital gains tax liability. There would be capital acquisition tax consequences for the person who was allotted the shares in this instance as the person has effectively received a gift (this would not be an issue where persons who hold the shares are married as transfers between spouses are exempt from tax).

Certain CRO forms may be filed manually or online, please refer to the CRO website for details on filing Forms.

Does the entity require the internal Beneficial Ownership and RBO to be amended following the allotment?

o If yes, ensure the RBO is updated within 14 days of the transaction.

By understanding the various factors that influence share allotment, as well as the legal and regulatory requirements surrounding it, investors and business owners can make informed decisions that contribute to the success and growth of their respective ventures. As the business landscape continues to evolve, staying abreast of developments in share allotment will remain a critical component of effective financial management and investment strategy.

The contents of this article are meant as a guide only and are not a substitute for professional advice. The authors accept no responsibility for any action taken, or refrained from, as a result of the material contained in this document. Specific advice should be obtained before acting or refraining from acting, in connection with the matters dealt with in this article.

If you require assistance or advice in relation to any of the above matters, please contact our team on 053 91 000 00 or email [email protected].

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About the Author

Sinead is a key member of the OmniPro Corporate Consultants Technical Support team providing advice and support in relation to Company Law and Company Secretarial procedures. In addition, Sinead is responsible for carrying out Section 343 applications to the District Court, Company Restorations, Annual Compliance, Company Conversions and Company Law Compliance. Sinead joined OmniPro in 2016 and quickly became an integral member of our Company Secretarial team. She started off her career in OmniPro as part of our Company Formations team building up her experience and knowledge before eventually moving into Company Secretarial. Sinead has a Masters Degree from Maynooth University.


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