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Share Allocation

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If a director allocates shares and does not inform one of the three directors of his action is the transaction illiegal and reversible.

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By johngroganjga
18th Oct 2016 14:19

Do you mean if he issues new shares to himself alone, and thus dilutes the holdings of the other shareholders?

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Hallerud at Easter
By DJKL
18th Oct 2016 14:45

Who were the shares allocated to, himself/family member or unrelated third party?

Whilst no solicitor I expect if the latter the answer may be different to that if the former.

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Big Daddy's Diner
By mookgirluk
18th Oct 2016 15:04

Unless the company's Articles of Association say something different, an allotment of shares would need to be approved by the board of directors and evidenced either by all directors signing a written resolution, or with a minute of a directors meeting.

A single director in a board of 4 would not have the authority to issue shares on their own.

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By Accountant A
18th Oct 2016 15:28

Presumably ultra vires and if so reversible. Not sure it's illegal as such unless fraud, eg, is involved.

Edit: seem to be seeing questions later than everyone elee!

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By Guy Spelman
18th Oct 2016 15:38

the shares were allocated to employees who he had recruited. but told no one until if showed up on companies house register...
there was no board meeting, no minute and no email

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Replying to Guy Spelman:
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By Accountant A
18th Oct 2016 16:06

Guy Spelman wrote:
there was no board meeting, no minute and no email

No shares, then!

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Replying to Guy Spelman:
By johngroganjga
18th Oct 2016 16:12

Did he file returns of allotments, or just complete the annual return assuming the allotments?

Line of least resistance is to hold a board meeting now to see if the board will retrospectively ratify the share issues. If they do - problem solved.

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Replying to johngroganjga:
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By Jack Spratt
18th Oct 2016 17:08

and if they don't-
Problem confirmed!

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Replying to Jack Spratt:
By johngroganjga
19th Oct 2016 08:48

Yes indeed. Especially with the employees who will have to be told that their shareholdings are not worth the paper they are written on. A reason perhaps why the board will have to think very carefully before deciding not to ratify the share issues.

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