Redemption of shares

A limited company may allot and issue redeemable shares.

The terms 'allotment' and 'issue' are often used interchangeably in relation to new shares in the capital of a company. However, the terms do have distinct legal meanings.

Shares in a company are allotted when a person acquires the unconditional right to have their name included in its register of members in respect of those shares. Shares in a company are issued when the name of the person to whom those shares have been allotted is entered in its register of members in respect of them. Therefore, allotment creates a right for a person to be registered as a member of a company, but only once a share has been issued can that person exercise their rights as a member.

For information on how redeemable shares may be allotted and issued and the reasons why a company may allot, issue and redeem them, see Practice Note: Issue of redeemable shares.

Legal framework

Redeemable shares are a statutory concept contained in Part 18 of the Companies Act 2006 (CA 2006), which includes detailed provisions relating

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