Issuing new shares — an allotment — creates shares that did not exist before and hands them to a new or existing shareholder. It is not the same as transferring shares, where an existing holder passes their shares to someone else and the total stays put. The practical consequence is dilution: everyone who already owns shares owns a smaller slice of the same company.
Once the shares are allotted, the clock starts. Companies House guidance says you must tell them within a month if you issue more shares in your company, and that notification is made on form SH01, the return of allotment of shares (gov.uk, verified 14 September 2026). Companies House recommends the online service, because paper forms sent by post take longer to process.
Before any of that, check your articles of association and whether existing shareholders have pre-emption rights. Getting that order wrong is harder to unpick than the filing itself.
What is an allotment of shares?
An allotment is the company creating and issuing new shares to someone. The company is on one side of the deal and the new shareholder is on the other, and money (or something else of value) usually comes into the business in exchange. That is the tell: in an allotment, the company gains a shareholder and normally gains funds. Nothing moves between two individuals.
That mechanic is why founders reach for it when a co-founder, an investor or a key hire is joining. The alternative — transferring existing shares instead — moves ownership between people and puts any payment in the seller's pocket, not the company's.
The sequence matters more than the paperwork. Most of the problems we hear about come from directors who agreed a deal first and read the articles afterwards.
Read the articles of association. They set out what the directors can do on their own and what needs the shareholders' say-so.
Confirm whether existing shareholders have pre-emption rights that have to be offered or waived first.
Agree the class of shares, the number and the price with the incoming shareholder.
Pass and record the decision in the company's own records, and issue the share certificate.
File form SH01 with Companies House within a month of the allotment.
If the new shareholder is also joining the board or will hold enough to count as a person with significant control, identity verification for directors and PSCs runs on its own track alongside this one.
Steps two and three are where a solicitor or your accountant earns their fee. Pricing shares and drafting the resolution are not jobs to improvise.
Not sure whether your articles let the directors do this without a shareholder vote?
What is form SH01 and when must it reach Companies House?
Form SH01 is the return of allotment of shares. Companies House describes it plainly: "This form can be used to give notice of shares allotted following incorporation" (gov.uk, verified 14 September 2026). The same guidance adds that paper forms sent in by post take longer to process, and points you to the online service to update your information as quickly as possible.
The deadline is one month. Companies House states: "You must tell Companies House within a month if you issue more shares in your company" (gov.uk, verified 14 September 2026). That is a different clock from the other changes you might file in the same week, which is exactly how directors trip over it.
Here is how the main Companies House deadlines line up:
Change to your company
Deadline to tell Companies House
Issuing (allotting) more shares
Within one month
Changes to the articles of association
Within 15 days
Directors, company secretaries, or where you keep your records
Within 14 days
All three come from Companies House guidance verified on 14 September 2026. Keep them separate from anything owed to HM Revenue and Customs — Corporation Tax and Self Assessment run on their own timetable, and mixing the two up is the costliest habit in this area.
Do existing shareholders have pre-emption rights?
Often, yes — and if they do, new shares generally have to be offered to them first, in proportion to what they already hold, before anyone else gets a look. The point is fairness: someone who put money in early is not diluted without being given the chance to keep pace.
Whether those rights apply to your company, and whether they can be disapplied or waived, depends on your articles of association and on any shareholders' agreement sitting behind them. Companies set these up differently, so the honest answer is that you read your own documents rather than a general article. Where the wording is not obvious, take it to a solicitor before the shares are allotted, not after.
Skipping this step is one of the few mistakes here that can sour a relationship with an existing shareholder permanently. The filing can be corrected; a co-founder who feels cut out is a different matter.
Want the share basics laid out in one place before you commit to anything?
How much does issuing shares dilute the current owners?
Dilution is simple arithmetic, and it catches people out because it happens to the percentage, not to the shares themselves. Nobody takes your shares away — the denominator just gets bigger.
As an illustration: you hold 100 shares and own the whole company. You allot 25 new shares to an incoming partner. There are now 125 shares in issue, you still hold your 100, and your stake is 80%. Your partner holds 20%. Repeat that with another investor and your 100 shares become a smaller fraction again.
What that percentage actually controls — voting, dividends, a say in a sale — depends on the class of shares and on what your articles say about each class. Two shareholders on identical percentages can hold very different rights. That is the part worth modelling with an adviser before you set the number, because the split you agree today is the one you live with at every future decision.
Issuing shares or transferring shares — which one do you actually need?
Ask where the money should land. If the business needs the cash — for stock, hires or growth — you issue new shares and the company receives the payment. If an existing owner wants to cash out, step back or hand shares to a family member, that is a transfer: the shares already exist, they change hands using a stock transfer form, and the company's total share count does not move.
A second test is dilution. An allotment dilutes everyone who already holds shares. A transfer does not — it only rearranges who holds what. Investors coming in with fresh funds almost always means an allotment; a departing co-founder almost always means a transfer.
Still weighing up which route fits the deal on your table?
Whichever way it goes, diarise the filing the day the decision is made. One month sounds generous until the paperwork sits in someone's inbox while a deal completes around it.
Frequently asked questions
How long do I have to tell Companies House about new shares?
One month. Companies House guidance is explicit: you must tell them within a month if you issue more shares in your company (gov.uk, verified 14 September 2026).
Should I use the paper SH01 or file online?
Online. Companies House states that paper forms sent by post take longer to process and directs companies to the online service to update their information as quickly as possible (gov.uk, verified 14 September 2026).
Is issuing shares the same as transferring shares?
No. Issuing creates new shares and the company receives the payment. Transferring moves existing shares between people, and the payment goes to the seller.
Can existing shareholders stop me issuing new shares?
They may have pre-emption rights that must be offered or waived first, and your articles may require a shareholder decision. Read the articles and any shareholders' agreement, and take advice if the wording is unclear.
What happens to my percentage when new shares are issued?
You keep the same number of shares, but they represent a smaller share of a larger total. Hold 100 of 100 shares and you own 100%; allot 25 more and the same 100 shares are 80%.
Issuing new shares — an allotment — creates shares that did not exist before and hands them to a new or existing shareholder. It is not the same as transferring shares, where an existing holder passes their shares to someone else and the total stays put. The practical consequence is dilution: everyone who already owns shares owns a smaller slice of the same company.
Once the shares are allotted, the clock starts. Companies House guidance says you must tell them within a month if you issue more shares in your company, and that notification is made on form SH01, the return of allotment of shares (gov.uk, verified 14 September 2026). Companies House recommends the online service, because paper forms sent by post take longer to process.
Before any of that, check your articles of association and whether existing shareholders have pre-emption rights. Getting that order wrong is harder to unpick than the filing itself.
What is an allotment of shares?
An allotment is the company creating and issuing new shares to someone. The company is on one side of the deal and the new shareholder is on the other, and money (or something else of value) usually comes into the business in exchange. That is the tell: in an allotment, the company gains a shareholder and normally gains funds. Nothing moves between two individuals.
That mechanic is why founders reach for it when a co-founder, an investor or a key hire is joining. The alternative — transferring existing shares instead — moves ownership between people and puts any payment in the seller's pocket, not the company's.
The sequence matters more than the paperwork. Most of the problems we hear about come from directors who agreed a deal first and read the articles afterwards.
Read the articles of association. They set out what the directors can do on their own and what needs the shareholders' say-so.
Confirm whether existing shareholders have pre-emption rights that have to be offered or waived first.
Agree the class of shares, the number and the price with the incoming shareholder.
Pass and record the decision in the company's own records, and issue the share certificate.
File form SH01 with Companies House within a month of the allotment.
If the new shareholder is also joining the board or will hold enough to count as a person with significant control, identity verification for directors and PSCs runs on its own track alongside this one.
Steps two and three are where a solicitor or your accountant earns their fee. Pricing shares and drafting the resolution are not jobs to improvise.
Not sure whether your articles let the directors do this without a shareholder vote?
What is form SH01 and when must it reach Companies House?
Form SH01 is the return of allotment of shares. Companies House describes it plainly: "This form can be used to give notice of shares allotted following incorporation" (gov.uk, verified 14 September 2026). The same guidance adds that paper forms sent in by post take longer to process, and points you to the online service to update your information as quickly as possible.
The deadline is one month. Companies House states: "You must tell Companies House within a month if you issue more shares in your company" (gov.uk, verified 14 September 2026). That is a different clock from the other changes you might file in the same week, which is exactly how directors trip over it.
Here is how the main Companies House deadlines line up:
Change to your company
Deadline to tell Companies House
Issuing (allotting) more shares
Within one month
Changes to the articles of association
Within 15 days
Directors, company secretaries, or where you keep your records
Within 14 days
All three come from Companies House guidance verified on 14 September 2026. Keep them separate from anything owed to HM Revenue and Customs — Corporation Tax and Self Assessment run on their own timetable, and mixing the two up is the costliest habit in this area.
Do existing shareholders have pre-emption rights?
Often, yes — and if they do, new shares generally have to be offered to them first, in proportion to what they already hold, before anyone else gets a look. The point is fairness: someone who put money in early is not diluted without being given the chance to keep pace.
Whether those rights apply to your company, and whether they can be disapplied or waived, depends on your articles of association and on any shareholders' agreement sitting behind them. Companies set these up differently, so the honest answer is that you read your own documents rather than a general article. Where the wording is not obvious, take it to a solicitor before the shares are allotted, not after.
Skipping this step is one of the few mistakes here that can sour a relationship with an existing shareholder permanently. The filing can be corrected; a co-founder who feels cut out is a different matter.
Want the share basics laid out in one place before you commit to anything?
How much does issuing shares dilute the current owners?
Dilution is simple arithmetic, and it catches people out because it happens to the percentage, not to the shares themselves. Nobody takes your shares away — the denominator just gets bigger.
As an illustration: you hold 100 shares and own the whole company. You allot 25 new shares to an incoming partner. There are now 125 shares in issue, you still hold your 100, and your stake is 80%. Your partner holds 20%. Repeat that with another investor and your 100 shares become a smaller fraction again.
What that percentage actually controls — voting, dividends, a say in a sale — depends on the class of shares and on what your articles say about each class. Two shareholders on identical percentages can hold very different rights. That is the part worth modelling with an adviser before you set the number, because the split you agree today is the one you live with at every future decision.
Issuing shares or transferring shares — which one do you actually need?
Ask where the money should land. If the business needs the cash — for stock, hires or growth — you issue new shares and the company receives the payment. If an existing owner wants to cash out, step back or hand shares to a family member, that is a transfer: the shares already exist, they change hands using a stock transfer form, and the company's total share count does not move.
A second test is dilution. An allotment dilutes everyone who already holds shares. A transfer does not — it only rearranges who holds what. Investors coming in with fresh funds almost always means an allotment; a departing co-founder almost always means a transfer.
Still weighing up which route fits the deal on your table?
Whichever way it goes, diarise the filing the day the decision is made. One month sounds generous until the paperwork sits in someone's inbox while a deal completes around it.
Frequently asked questions
How long do I have to tell Companies House about new shares?
One month. Companies House guidance is explicit: you must tell them within a month if you issue more shares in your company (gov.uk, verified 14 September 2026).
Should I use the paper SH01 or file online?
Online. Companies House states that paper forms sent by post take longer to process and directs companies to the online service to update their information as quickly as possible (gov.uk, verified 14 September 2026).
Is issuing shares the same as transferring shares?
No. Issuing creates new shares and the company receives the payment. Transferring moves existing shares between people, and the payment goes to the seller.
Can existing shareholders stop me issuing new shares?
They may have pre-emption rights that must be offered or waived first, and your articles may require a shareholder decision. Read the articles and any shareholders' agreement, and take advice if the wording is unclear.
What happens to my percentage when new shares are issued?
You keep the same number of shares, but they represent a smaller share of a larger total. Hold 100 of 100 shares and you own 100%; allot 25 more and the same 100 shares are 80%.
