Company shares and shareholders

When you set up a company with share capital, you can decide on the level of share capital and its division into fixed priced shares.

A statement of capital and initial shareholdings must be delivered to Companies House on form IN01 on incorporation of the company.

This will set out:

• the amount of share capital the company will have
• the division of the share capital

Family or friends

You may choose to issue shares to family or friends in return for investment in your business, rather than accepting the offer of a loan from them. That way you're not obliged to make repayments. It is important to formalise any agreement with family members or friends as this can help you avoid or resolve any disputes that may arise in future. See financing from friends and family.

Employees

Employee share ownership schemes offer employees a stake in the business, encouraging loyalty and helping you to retain key staff. They also provide an incentive or reward for performance and can help recruitment. See set up employee share schemes.

Issued capital

A company need not issue all its capital at once. Issued capital is the nominal - rather than actual - value of the part of the share capital that has been issued to shareholders.

For example, a company that issues 500 shares at £1 each has an issued share capital of £500.

Public limited companies (plcs) must have at least £50,000 worth of issued share capital before they are allowed to trade. Initially they must satisfy this requirement by means of shares in sterling or in euro shares (and not by a combination of the two).

Once a plc has started to trade, the requirement can be satisfied by means of share capital denominated in multiple currencies (including currencies other than sterling or euros). Every share issued by a plc must be paid up at least as to a quarter of its nominal value - plus the whole of any premium from issuing the shares at a higher price.

Limited companies must notify Companies House of any new shares issued. They can do this by completing form SH01.