4.4 Issue and allotment

4.4 ISSUE AND ALLOTMENT

Issue of shares

The issue of shares refers to the creation and availability of new shares by a company for subscription or purchase. Companies may issue new shares to raise capital, fund expansion, acquire assets, or for other business purposes.

The issue of shares may require shareholder approval, particularly if it involves a significant increase in the company’s authorized share capital or if it involves the issuance of shares with special rights or preferences.

Allotment of shares:

Allotment is the process of allocating or assigning the newly issued shares to specific individuals or entities who have applied for or agreed to purchase the shares.

Allotment is usually conducted by the company’s board of directors or by a designated committee with the authority to make allotments.

The allotment process involves reviewing applications or purchase agreements, verifying compliance with applicable laws and regulations, and determining the allocation of shares based on the terms and conditions of the share issuance.

The allotment decision is typically communicated to the applicants, and the allotted shares are reserved for the successful applicants.

NOTE;

1. Share issuance and allotment must comply with the legal requirements and regulations of the jurisdiction in which the company operates.
2. The process may involve obtaining necessary approvals from regulatory authorities, such as securities commissions or stock exchanges, depending on the nature and size of the share issuance.
3. Companies may choose to issue shares publicly through an initial public offering (IPO) or privately through a private placement or rights offering.
4. The terms of the share issuance, including the price per share, the number of shares being issued, any special rights or preferences attached to the shares, and the timeline for payment and share delivery, are typically set out in the offer documents or subscription agreements.
5. After the allotment of shares, the company usually prepares share certificates or electronic statements to evidence the ownership of the allotted shares by the shareholders.
6. Shareholders who have been allotted shares may be required to make the necessary payment for the shares within a specified timeframe as per the terms of the share issuance.