What Do I Need to Know About Shares in My New Company?

Most new companies start simple: one share each for the founders, usually worth £1. It's only once dividends, outside investment, or tax planning come into the picture that people start asking harder questions about share classes and valuation, and at that point it's genuinely worth a proper conversation with an accountant rather than a guess made at formation.

Key Takeaways

• A single share worth £1 per founder is the standard, simplest starting point, and there's no requirement to issue more.
• The £1 figure is a nominal value, not a reflection of what the company is actually worth.
• Your first shareholders are called Subscribers, and they'll always show as shareholders at incorporation on the public record, even if their shareholding changes later.
• Some companies issue different share classes so dividends can be paid at different rates to different shareholders, though this needs proper advice before setting up.
• Each shareholder should be given a share certificate confirming what they hold, and your company should keep a copy too.

How Many Shares Should I Issue When I Form My Company?

Most new companies keep it simple: one share per founder, usually valued at £1 each. There's no requirement to issue more than that at formation, and plenty of companies never need to.

What Does £1 Per Share Actually Mean?

It's the nominal value, a fixed reference figure used for company records, not a statement about what the company or its shares are genuinely worth. A company with two founders each holding a single £1 share is just as valid a structure as one issuing thousands of shares at a lower value each. What matters more than the number is how the shares are split between founders, since that split determines ownership percentage and voting power.

Who Are the First Shareholders, and Does That Matter Later?

Your company's first shareholders are known as Subscribers, and they're recorded as such at the point of incorporation. This stays part of your company's public history permanently, so even if a Subscriber later transfers or gives up their shares entirely, they'll still show as a shareholder at incorporation on the public record.

How Do I Actually Pay for My Shares?

You can pay into the company's bank account straight away, or, if the company already owes you money, say you've personally covered an early cost like business cards or a domain name, you can offset the share cost against that instead.

Why Do Some Companies Use Different Share Classes?

Founders with different personal tax situations sometimes use different share classes so the company can pay dividends at different rates to each shareholder. For example, a company with two co-founders might issue an Ordinary A share to one and an Ordinary B share to the other, allowing dividends to be declared unevenly between the two classes.

This is sometimes called an alphabet share structure, and it genuinely can help two shareholders with different circumstances, one working full-time elsewhere, one working solely for the company, structure their income more efficiently. It isn't something to set up casually, though. HMRC can challenge these arrangements if they look like they exist purely to avoid tax rather than reflect a genuine difference in the shareholders' roles, so it's worth getting proper accountancy advice before structuring shares this way.

Do I Get Anything Proving I Own My Shares?

Yes, a share certificate, showing your name, the address held on record, your share class, and how many shares you hold. Every shareholder should receive one, and your company should keep a copy on file as part of its own records.

Can I Change the Share Structure After Formation?

Yes, at any point. You can issue new shares, bring in additional shareholders, or transfer existing shares between people. Our guide to adding new shares and shareholders covers exactly how that process works once your company already exists.

FAQs

How many shares does a new company need?

Just one per founder is standard, usually worth £1 each. There's no legal requirement to issue more.

Does £1 per share mean my company is only worth £1?

No, that figure is a nominal value used for company records, not a valuation of the business itself.

Do I have to pay for my shares immediately?

No. You can pay straight away, or offset the cost against money the company already owes you.

Why would a company use different share classes?

To let dividends be paid at different rates to different shareholders, usually because they have different personal tax circumstances.

Is it risky to set up an alphabet share structure?

It can be, if HMRC decides it exists mainly to reduce tax rather than reflect real differences between shareholders. Get proper advice before setting one up.

Do I need a share certificate?

Yes, every shareholder should be given one, and your company should keep its own copy too.

This article is for general information only and does not constitute legal or tax advice. Share structures with tax implications should be discussed with a qualified accountant before you set them up.