How many shares should I start my company with?

One of the key decisions that comes up in the early days of starting a new limited company will be around shares in that company.
In this video we specifically look at the question of how many shares a start up company should have.
And instead of giving you the classic answer of 'it depends' look in detail at the factors involved, why 'flexibility' is critical when coming up with the final answer and also why what 'types' of shares your start-up company is going to have is something you need to consider at the same time.
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/ @basicsofbiz
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The information contained in our videos is provided as general information only. It is not a substitute for professional advice.

[@basicsofbiz]

If you are now ready to start a limited company here is our complete step by step tutorial taking you through the full process to successfully form one in the UK. - kzbin.info/www/bejne/gXjSe4WMprajhKM

[@piusMusonda-iv8sj]

Very educatev

[@basicsofbiz]

Delighted you found the video useful 👍

[@Clubvirg]

Helpful video! Thanks a lot

[@basicsofbiz]

No worries at all. Delighted you found it useful!

[@cleronablades5000]

Very helpful 👌 ☺️ 🙂

[@basicsofbiz]

Many thanks Clerona. Delighted you found the video helpful!

[@f_b8158]

Great content. Thank you.

[@basicsofbiz]

Glad you enjoyed it!

[@Jermainebryan876]

I didn’t know much about shares when registering my company. And I opens it with 10 million shares. I am the sole director though. How will this affect me when seeking investment or adding other directors when the time comes?

[@basicsofbiz]

Thanks for the question. Firstly the number of shares issued is not relevant for adding directors. Shareholders and directors can be completely independent of one another. Secondly having a large number of shares will make the calculation for % ownership easier when you come to raise investment, because each individual share will have a lower value. Third though the main issue with having a large number of shares is whether you created them with the correct nominal value. If you have 10 million shares of £1 each you owe the company £10,000,0000. I assume you do not have £1 shares and have created shares with a nominal value of say £0.0001 which means you would only need to invest £1,000 for the 10 million shares. Hope this helpful.

[@eazybean6160]

Thanks for video, very informative. If a sole director of limited company who set their business up with 1 x £1 share then wants to make their partner a shareholder, so issues another 1 x £1 share through allotment, does this mean the share capital is £2 and both own equal share of business?

[@basicsofbiz]

Hi Thanks for the question. The simple answer is yes, exactly right. You could vary the ownership, voting, right to income or capital by having different classes of shares, but assuming just Ordinary £1 shares, then yes each person would hold 1 share. They each have an equal vote, right to income/dividends and capital on a sale. Hope that is helful.

[@shamargayle1745]

say i have a company with a 100 shares. two sharehlders involved myself and someone else equally. i want to expand with shares. say the company issue another 100 share to investor. how do i determine the price of the share? can the additional shares value be less than the original 100 ?and how does it affect my original share price

[@basicsofbiz]

Lots of what if scenarios from your question. But if we assume that the shares are all of the same class and you and your co-founder paid the same for your 50 shares each, then the new investor can pay a completely different amount for their 100 shares. The price will be decided between you and the investor. How much are they willing to invest to own 50% of the new share capital of 200 shares. Whatever that is will then determine the value of your shareholding - although this may decide the value, it doesn't necessarily mean that there is a market for your shares and that you can get anyone else to pay that for them. I hope that has helped, but you should take your own specific professional advice on how a new investment impacts the company and other shareholders, both legal and tax impacts need to be considered.

[@shamargayle1745]

@@basicsofbiz thanks you

[@basicsofbiz]

No problem at all 👍

[@Lazy-killer-on-duty]

I don't understand

[@chucklohn522]

I watched about 5 minutes of this. I don't think it's really relevant if you are trying to raise something like $150 million in funding.

[@basicsofbiz]

Thanks for your comment and if you are raising sums like $150m then there will be many unique aspects to your raise and the demands of the investors. Hopefully, the general gist of the video about planning for the future still had some relevance. If you know that you need to raise sums like this, you will want to structure your share capital to be able to achieve the raise. Good luck and would love to know if you managed to get the funding.

[@musicjunk8266]

how are you getting on raising finance for your fantasy business Chuck? 😂