Why do I need to issue shares?


Hello all, my name is Harrison and I am forming a limited company - or, trying, at least. I’m doing this all by myself, but I’ve been told it makes more sense to incorporate as a company rather than a sole trader, from a tax point-of-view. That’s fine. But it doesn’t really make sense to issue shares in a company in which I am the only shareholder. Why bother at all? Is there any particular reason?



It does seem a bit pointless to issues shares when you are going to be the only shareholder (owner) of a company, but it is a legal requirement to issue at least one share per shareholder. The reason being that the share capital of a company determines the limited liability of its shareholder(s); therefore, you must issue at least one to be able to create share capital and determine your liability.

Share capital is simply the total nominal value of a company’s issued shares. Shareholders must pay the value of their shares if the business is unable to pay its creditors. The value of a share can be anything you like, but most people choose a nominal value of £1 per share. This is the limit of your financial obligation to the company.

2 years ago

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