This article is written for new business founders and entrepreneurs who need to understand the basics of company share structures. If you're setting up a company in Ireland or the UK, this information is essential for your compliance journey.
Key Takeaways
Authorised share capital sets the maximum number of shares a company can issue, similar to a venue's maximum capacity.
Issued share capital represents the shares actually allocated to shareholders, like tickets that have been sold for a concert.
Irish companies are no longer required to set a maximum authorised share capital, providing greater flexibility for future growth.
Even without a maximum limit, proper procedures must still be followed when issuing new shares.
A company's constitution details how share capital is structured and managed.
Different classes of shares offer varying rights and privileges to shareholders, similar to different ticket types at an event.
Can a company issue more shares than its authorised share capital?
No. A company cannot issue more shares than its authorised capital without first increasing the authorised capital through proper procedures, typically involving a shareholder resolution and updating the company constitution.
What happens if an Irish company doesn't specify an authorised share capital?
The company can issue shares as needed without being constrained by a predetermined limit, subject to director approvals and shareholder resolutions where required by law or the company's constitution.
Do all shareholders have equal rights regardless of when they acquired their shares?
Not necessarily. Rights depend on the class of shares held rather than when they were acquired. Different classes (ordinary, preference, etc.) confer different rights regarding voting, dividends, and capital return.
Can authorised share capital be increased after company formation?
Yes. Authorised share capital can be increased through a shareholder resolution and by updating the company's constitutional documents. In Ireland, for companies without a stated maximum, this step is unnecessary.
