Q&As
Validity of unpaid share allotment to employee benefit trust
If a share has been allotted to an employee benefit trust for no payment, is the allotment invalid and will the shares need to be paid for on a future date?
Although a share may be transferred without payment from the recipient in certain circumstances, an allotment of a share cannot. This is because s 580(1) of the Companies Act 2006 (CA 2006) provides that 'a company's shares must not be allotted at a discount'.
Nevertheless, if shares have been issued to the trustees of an employee benefit trust (EBT) for no payment, this does not make the allotment of the shares invalid, but the trustees – or any future holder of the share – may be liable to pay at least nominal value for the shares, and
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