How To Issue Shares In A Singapore Private Company

The issuing of new shares is one way to secure capital for your business in a Singapore incorporated private company.

Things to consider before issuing shares

1. Types of shares
   There are ordinary shares, preference shares, shares with special voting rights, management shares, or even alphabet shares.
   (a) Ordinary shares
   Ordinary shares have equal voting rights. This is also the most common type of shares issued by a company. Their entitled dividend rights are in accordance with their shareholding proportions. Ordinary shares can further be divided into what we call alphabet shares which can further segregate different classes of shares with different rights that come with it (e.g. Class A/B/C)
   (b) Shares with different types of rights
   There is a wide variety of shares. Preferential shares which have preferential dividend rights. Shares that have no voting rights or shares that have more voting rights. Management shares have special rights as well, for example, to appoint a board member.
2. Shareholders approval
   The issuing of shares is normally done through a director’s resolution. The shareholder(s) will have to give their approval to the board, for the issuance of new shares as per section 161 of the Companies Act.
   The board must have either:
   (a) specific approval for that particular allotment of shares; or
   (b) A general approval through the form of a general meeting, giving approval to the Board of Directors to issue shares
   There may be a need to hold an Extraordinary General Meeting (EGM) to get approval from the existing shareholders before issuing any new shares. You may need to refer to your company’s constitution if there are any specific procedures that you may need to perform before the company can issue any new shares.

How can I issue new shares?

Alternatively known as allotment of shares, whereby your company’s new shareholders subscribe to the company’s constitution.

Your corporate secretary will prepare the following documents for you:

1. A Director’s Resolution in Writing documenting down the issuance of the shares;
2. Lodging with Accounting and Corporate Regulatory Authority (ACRA) within 14 days a return of allotment and
3. New share certificate(s)

The following information should be in the return of the allotment:

1. Total number of shares in the allotment;
2. Break down of amount paid or deemed paid or unpaid on the allotment of each share;
3. In the event, there are different classes of shares, the specific class of shares to which each share belongs to in the allotment and
4. The full legal name, identification, nationality, address of, and the amount and class of shares held by each shareholder of the company. If there are more than 50 members, such particulars of each of the 50 members who hold the most shares in the company after allotment.

After the allotment of shares, your company must issue the share certificates to new shareholders within 60 days. Your corporate secretary must update the register of members after the issuing of share certificates to new shareholders.

Is there a need to issue a prospectus?

Any offers of securities in the form of shares or bonds or other derivative products, a prospectus has to come together with it. This is pursuant to section 240 of the Securities and Futures Act (SFA).

You can avoid having to issue a prospectus, which can be very costly and time-consuming. You can instead utilise a private placement exception pursuant to section 272B of the SFA if you fulfil certain conditions. The conditions are to make the offer of investment to not more than 50 persons within any 12 months period, and not to have any advertisements or promotional expenses.

Your company must document the shares’ details, their rights and obligations in the company constitution or shareholder’s agreement,  In the event of any legal disputes, all aggrieved parties can refer to the shareholder’s agreement or constitution.

If you have any questions regarding how to issue new shares in your company, feel free to contact us.

Download the Telegram app and follow us for the latest updates: https://t.me/sgcompanyservices