Must a company allot all its shares at incorporation?

Must a company allot all its shares at incorporation?

June 14, 2019

A share can simply be explained as the power, rights, interest, and obligations that its holder have over a company. It is what determines the profit that a holder is entitled to in a company.

During incorporation, a company usually subscribes to a certain amount of shares as it deem fit. These shares are usually divided among the shareholders and the minimum number of shareholders for a company is two.

It is however not a requirement that a company must allot all its shares during incorporation. An allotment of shares is when a company issues its shares to an already existing shareholder or a third party.

In Nigeria, a company must allot up to 25 percent of the shares it subscribes to during incorporation. The remaining shares will be kept on reserve.

The advantages of this is that a company can use shares in reserve to raise funds, bring in investors, to convert loans to capital, etc

 

 

 

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