How can a company issue new shares and increase its share capital?
In Singapore, companies have specific requirements they need to meet when issuing new shares and increasing share capital. Nonetheless, you may notify us as your appointed company secretary to work on these, while you can focus on the day-to-day business operations!
In connection with the above, we outline some of the following requirements to take note prior to the company in issuing new shares and increasing its share capital:
1. Corporate Approvals: Before a company can issue new shares or increase share capital, it needs to obtain approval from its existing shareholders for the purpose of Section 161 of the Companies Act of Singapore. This approval is typically obtained through a resolution passed at a general meeting or written consent from shareholders.
2. Constitution: The company’s Constitution (also known as the Memorandum and Articles of Association) must allow for the issuance of new shares and increase in share capital. These legal documents outline the rules and regulations governing the company’s operations, including provisions related to share issuance.
3. Shareholders’ Agreement (if any): For some companies who has entered into transactional agreements, there will be requirements to observe if there are any additional or reserved rights so that we can ensure that the interest of existing shareholders is observed prior to the company issuing new shares and increasing its share capital.
4. Shareholders’ Rights: Existing shareholders of the company typically have pre-emptive rights when new shares are issued. This means they have the first opportunity to purchase the new shares in proportion to their existing shareholdings. These rights help protect the interests of current shareholders.
5. Filing with the Accounting and Corporate Regulatory Authority (ACRA): The company must submit the necessary filings and documentation to ACRA, which is the regulatory authority responsible for overseeing corporate activities in Singapore. This includes the completion of prescribed forms, such as the Notice of Resolution for the issuance of new shares and increase in share capital.
It’s necessary to note that the specific processes and requirements may differ depending on the type of company (e.g. either private or public companies), and/or other factors. Consulting us as your legal advisor or corporate secretary is highly recommended to ensure compliance with all applicable laws and to guide you through the process.
25 December 2023