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ACCA Applied Skills · Corporate and Business Law (Global) · Share capital

Delta Ltd is a private company with one class of shares. Its articles are silent on allotment. The directors wish to allot new shares to an outside investor, Mr Okoye. Under the general company law approach used in the LW Global syllabus, what must the directors normally have before they may validly allot the shares?

Directors need authority to allot, given by the articles or by the members in general meeting. Allotment is a power that must be conferred, so auditors, courts or creditors do not need to approve an ordinary share issue.

  1. AAuthority to allot, given by the articles or by the members in general meetingCorrect
  2. BApproval from the company's external auditor
  3. CA court order permitting the issue
  4. DConsent from every existing creditor of the company

Explanation

Directors hold power to allot only when authorised, either by the articles or by an ordinary resolution of the members. Auditor approval, a court order and creditor consent are not requirements for an ordinary allotment.

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