Quick answer
A share allotment creates new shares and changes the company’s issued capital and ownership percentages. Before filing, the company should obtain shareholder approval, set the number, class, issue price and consideration, check the constitution and investment terms, document the directors’ decision and file the return of allotment so the EROM is updated.
- An allotment creates new shares; it is different from transferring existing shares.
- ACRA states that shareholder approval through a general meeting is required before allotment, even if the constitution allows directors to decide.
- Directors decide the number, terms and price subject to section 161 and the company’s documents.
- Private-company allotments take effect when the EROM is updated on filing.
- Non-cash allotments need clear valuation and supporting transaction documents.
Why companies allot new shares
Companies allot shares to raise working capital, admit an investor, capitalise a shareholder loan, acquire an asset, implement an employee or founder arrangement, or restructure group ownership. The commercial purpose should determine the documentation. A cash investment needs evidence of funds; a debt enquiry needs a clear balance and enquiry terms; a non-cash issue needs evidence of the consideration provided.
An allotment changes the denominator of ownership. Even where an existing shareholder receives all new shares, total issued capital changes. Where a new investor subscribes, existing shareholders may be diluted. Prepare a before-and-after cap table before seeking approval.
Approvals before the return of allotment
ACRA states that the company must obtain approval from shareholders through a general meeting before allotting shares, even if the constitution permits directors to decide on allotment. The directors can then decide the number of new shares, terms and price in compliance with section 161 of the Companies Act.
The company should review whether an earlier general mandate is still valid and whether the constitution, shareholder agreement or investment agreement imposes pre-emption rights or reserved-matter approval. A bare board resolution is not enough if shareholder authority is missing.
Terms that must be settled
| Area | What to check | Why it matters |
|---|---|---|
| Share class | Ordinary, preference, redeemable or other permitted class. | Determines voting, dividend and redemption rights. |
| Number of shares | Exact quantity allotted to each subscriber. | Drives ownership percentages and EROM. |
| Issue price | Amount payable per share and total consideration. | Supports capital and accounting records. |
| Paid-up status | Fully paid or partly paid, and when funds are due. | Affects paid-up capital and future obligations. |
| Consideration | Cash, debt enquiry, asset, contract or other non-cash value. | Determines required evidence and accounting. |
| Effective date | Coordinated with filing and investment completion. | Private-company allotment takes effect on EROM update. |
Cash versus non-cash allotment
For cash allotments, keep the subscription agreement or application, bank receipt, remittance details and source-of-funds information. The accounting entry should match the legal terms: share capital, any other relevant equity classification, and the amount actually paid.
For non-cash allotments, identify exactly what the company receives. Examples include an asset, satisfaction of a debt, or performance under a contract. ACRA recognises that shares may be allotted for non-cash consideration, but the company still needs a defensible value and complete supporting documents. Avoid vague language such as “for services rendered” without identifying the service, period and agreed value.
Dilution and control review
Directors should model the post-allotment ownership before approval. A new issue may change majority control, reserved-matter thresholds, dividend participation and registrable-controller status. It may also affect whether the company remains an exempt private company or fits an investor’s governance conditions.
Where the allotment creates or changes a nominee shareholder arrangement, update RONS records. Where a person crosses a control threshold or obtains significant control rights, review RORC. Do not treat the return of allotment as the only record affected.
Filing and post-filing checks
For a private company, ACRA states that the allotment takes effect on the date of filing once the EROM is updated. The filing should reflect the correct class, currency, number of shares, consideration and subscriber details. Errors in share filings can be expensive and may require more than a simple correction.
After submission, verify the EROM and total issued and paid-up capital. Prepare or update share certificates where the company uses them, finalise the cap table, update private registers and place the approvals, agreements and evidence of consideration into the statutory file.
Allotment workflow
Build the before-and-after cap table
Model dilution, control and share class rights.
Obtain shareholder authority
Pass the required general-meeting approval and check contractual consents.
Approve the terms
Directors record the number, price, class, consideration and subscribers.
Complete funding or consideration
Retain bank proof, debt confirmation or non-cash evidence.
File and reconcile
Submit the return of allotment and verify EROM, capital and registers.
Investor closing and accounting alignment
An investor closing often includes more than the return of allotment. Conditions may include execution of a shareholder agreement, appointment of a director, amendment of the constitution, enquiry of founder loans, delivery of warranties and receipt of funds. The company should use one closing checklist so the share filing is not completed while essential investor documents remain unsigned.
The finance team should reconcile the legal capital terms to the bank receipt and ledger. If the subscriber pays in a foreign currency, document the amount credited, exchange-rate treatment and how the Singapore-dollar or other denominated share capital is recorded. If payment is received in tranches, confirm whether shares are fully or partly paid and whether the filing matches the actual position.
After completion, circulate an updated cap table to directors and shareholders. It should reconcile exactly to EROM and identify any options, convertible instruments or promised future shares that are not yet part of issued capital.
Frequently asked questions
Is shareholder approval needed before allotting shares?
Yes. ACRA states that shareholder approval through a general meeting is required before allotment, even if the constitution allows directors to decide on share allotment.
When does a private-company allotment take effect?
ACRA states that it takes effect on the same date as filing once the EROM has been updated.
Can shares be allotted for non-cash consideration?
Yes. ACRA gives examples such as fulfilling a contract, meeting a constitutional provision or exchanging shares for dividend payments, but supporting documents and valuation remain important.
Does an allotment create stamp duty?
A straightforward issue of new shares is different from a transfer of existing shares. However, related agreements, property-holding interests or restructuring facts may require separate tax or stamp-duty review.
What should I send ProSec for an allotment?
Send the current constitution and cap table, investor or subscription terms, number and class of shares, issue price, consideration, funding evidence and intended completion date.
Official sources
These sources support the regulatory points in this guide. Check the current official page and the company’s own documents before acting.
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ProSec helps Singapore companies turn shares and shareholders questions into clear approvals, accurate Bizfile updates and complete statutory records.
Prepare a share allotment