Allotment of Shares vs Shares Transfer

What is share?

Share refer to degree of your ownership in the Company

You may owned shares via the following method :

  • Subscribers of shares
  • Allotment of shares
  • Transfer of shares
  • Shares qualification ( applicable to Company’s director only)

Subscribers of shares

Refer to person who owned shares during incorporation stage. They also called as founder of the Company

Allotment of shares

Company allowed to increase their shares at anytime .

Reason to increase shares can be anyone of the  following :

  • Need more fund to run the Company
  • Company got potential project
  • Better future plan for the Company

Allotment of shares via Cash

Allotment of shares in Cash form means that you are agreed to pump in certain amount of fund into Company bank account in return with company’s shares .

How much  to pay for the shares or how much shares’ value worth is depend on the agreement or confidence level on the Company.

Allotment of shares via otherwise than Cash

Whereas for otherwise than cash it can be offset against amount owned, fixed asset etc.

Example :

Mr Steve is the IT support for Company A

Company A not able to settled Mr Steve services invoices

Company A offer Mr Steve to become shareholder of Company A with certain amount of shares to offset against outstanding  invoices

Mr Steve accept the offer and become shareholder of the Company

Transfer of shares

Change of ownership can be caused by one of the following reason :

  • Company’s vision is different than their own
  • not confident on the company management
  • better investment opportunities
  • personal financial matters

The consideration price ( selling price ) will determined by the both parties ( transferee and transferor ) All the right or liabilities of the existing shareholder will transfer to the new shareholder

Director’s Share qualification

Some of the Company request their appointed Director to hold certain amount of shares. All the term and condition may be fixed by the Company in general meeting.

ACRA ‘s constitution have following clause :

  1. The shareholding qualification for directors may be fixed by the company in general meeting

Basic requirement to initial Allotment of Shares

Company’s director must empower by shareholder to increase shares as requested by Companies Act S161:

Approval of company required for issue of shares by directors

161.—(1) Notwithstanding anything in a company’s constitution, the directors shall not, without the prior approval of the company in general meeting, exercise any power of the company to issue shares.

If NO such authority was stated on the Company’s constitution, Company allowed to pass Extraordinary General Meeting (EGM) to effect the change .


Allotment of shares will caused increase in number of share whereas transfer of share have NO such impact

Apart from the above only shares transfer is liable to pay stamp duties to IRAS based on their selling price OR net asset value whichever is higher .

However, they do have 1  common right : Pre -Emption Right

What is Pre-Emption right ?

Is a right given to the company’s existing shareholder to acquire any NEW shares via allotment or shares transfer prior any outsider .

Why Pre-emption right is important ?

Is a key mechanisms to protect minority shareholders.

Some of the majority shareholder will try to control company by issue additional shares and this lead to dilution of the proportion shares for minority shareholder.

Pre- emption right play important role here where is request the offer must present to the existing or minority shareholder first to avoid dilution .

Pre-emption right as part of the Company Constitution 

Although Constitution does not expressly clearly about Pre-emption right, however it had been transfer authority to director.

Director is given right to approve or reject the allotment or shares transfer as stated following :

ACRA ‘ s copy of constitution stated very clearly as follow :

The directors may decline to lodge a notice of transfer of shares with the Registrar if :

(a) the shares are not fully paid shares ;

(b) the directors do not approve of the transferee ; or

(c) the company has a lien on the shares

Pre-emption right as part of the Companies Act

Companies Act request before any private company can be incorporated, its constitution must have a clause stated clearly the right to restrict the shares transfer .


Abolished Nominal Value of the shares

Singapore Companies Act had abolished nominal value of the shares with effect from 30 January 2006

Company can determined their own varied of value

When can be named as shareholder ?

Shareholder will only recognized as named shareholder upon their name is entered into Company’s statutory register book

Upon the shareholder named is entered into register member. He or she is eligible to the shareholder right include right to vote , attend meeting , review company minutes,

However shareholder ‘s right maybe different if the shareholder have not fully paid their share

Example ; 100 shares with agreed value of S$100 only paid S$50

Administration after changes

  • Issued of share certificate for the new shares
  • Update the statutory register book

share certificate specifying any shares held by any member of the company shall be prima facie evidence of the title of the member to the shares.



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