This article is for Irish startup founders who have just closed an investment round and need to legally complete the share allotment process.
If you're wondering what happens after the term sheet is signed—from board resolutions to CRO filings to issuing certificates—this guide covers the exact sequence of steps, statutory deadlines, and common mistakes that can create problems in your next funding round.
Key Takeaways
• You must file Form B5 with the CRO within one month of allotment; late filing is a criminal offence.
• Pass a detailed board resolution before allotment specifying share class, price, nominal value, premium, and effective date.
• Update the register of members before issuing share certificates to avoid creating inconsistent legal records.
• Shares issued to employees below market value trigger income tax and PRSI on the discount amount.
• Check your constitution for pre-emption rights and obtain written waivers from existing shareholders before allotting to new investors.
Laura Ryan is a practising Barrister at the Bar of Ireland. She graduated from the Honourable Society of King’s Inns in 2024, having previously qualified and practised as a Chartered Accountant in a big four accounting firm.
Do I need to hold a formal board meeting to allot shares to investors?
No, you don't need a formal board meeting for a private limited company. A board resolution passed by email or written consent is valid under the Companies Act 2014, provided all directors sign. However, many companies still hold formal meetings for significant investment rounds as a matter of good practice.
How long do I have to file Form B5 after allotting shares?
You must file Form B5 with the Companies Registration Office within one month of the allotment date. This deadline starts running from the date the allotment takes effect, not from when you receive the money or issue share certificates. Late filing constitutes a criminal offence for every officer of the company who is in default.
Can I issue share certificates before updating the register of members?
No, you should never issue share certificates before updating the register of members. This creates a mismatch between the certificate and the register, both of which are legal documents, and can cause significant problems later. The correct sequence is: board resolution, Form B5 filing, register update, then certificate issuance.
When do new shareholders actually get their voting rights and dividend entitlements?
New shareholders' rights formally attach from the date they are entered in the register of members, not from when the board resolution is passed or when money is received. Until a person is entered in the register, they are not legally a member of the company, even if all other steps have been completed.
What happens if I issue shares to employees below market value?
The discount between the price paid and the market value is treated as a benefit derived from employment under Irish tax law. This difference is subject to income tax and PRSI in the hands of the recipient, and the company may have its own PRSI obligations depending on the structure. This applies even to informal arrangements, though structured schemes like KEEP may offer tax relief in qualifying circumstances.
What details must be included in the board resolution for share allotment?
Your board resolution must specify the number and class of shares, the investor's name and details, the price including both nominal value and any share premium, the effective date of allotment, and authority for a named director or company secretary to complete all necessary steps. A vague resolution that simply states "allot 10,000 shares to [investor name]" will need to be replaced or supplemented.
Do existing shareholders have any rights before I can allot shares to new investors?
Many constitutions and shareholders agreements give existing shareholders pre-emption rights, meaning the right of first refusal on new shares before they can be offered to new investors. If these rights apply and are not properly waived in writing before the allotment, existing shareholders may have a legal basis to challenge the transaction. Always check your constitution and any shareholders agreements before proceeding.
How long do I have to issue share certificates after allotting shares?
You must complete and have ready for delivery a share certificate within two months of the allotment. The certificate must include the company's name and registered number, shareholder's name, number and class of shares, nominal value, payment status, and signatures of at least one director and the company secretary (or two directors).
