What do I need to tell ASIC when issuing shares in my company?

Compliance & Consumer Law, Corporate, Business Planning, Start-Ups

Issuing shares in your company can be an effective way to grow your business and raise capital. However, businesses must ensure they report share issues to the Australian Securities and Investments Commission (ASIC) to avoid serious legal consequences. This article outlines your obligations to ASIC as a company operator, and what you are required to report when issuing shares.

 

What is ASIC?

ASIC is an independent Australian government body which regulates the corporate and financial sector. Among other things, ASIC seeks to preserve consumer confidence in the financial sector by maintaining and publishing information about companies. This helps to ensure that companies are held accountable for their actions and do not engage in financial misconduct.

 

What is ‘issuing shares’?

‘Issuing shares’ means to create new shares in a company available for purchase or gifting. Companies may wish to issue shares to raise money and increase share capital or they may be issued as part of an employee or service provider incentive arrangement. People or companies that obtain a percentage of ownership in the company and become shareholders.

 

How do I issue shares?

Shares are issued according to a company’s constitution, shareholders agreement, or other governing documents and the Corporations Act. Generally, these documents will provide the process and any requirements for issuing shares in your company. For example, a shareholders agreement may provide that any new shares issued must first be offered to existing shareholders before external parties.

 

Share issues must be recorded in your company’s members register. A members register records information about each shareholder in a company, including their name, address, number of shares held, and class of shares owned.

 

What do I need to tell ASIC when issuing shares?

Companies must report any share issue to ASIC. This includes informing ASIC of:

  • A change to share structure, such as the number of shares in the company being increased; and
  • A change to members register, such as the details of shareholders which have changed or any new shareholders added to the register. This includes where shareholders sell their shares even if the company does not issue more shares.

 

How do I tell ASIC I have issued shares?

Companies must report share issues by lodging forms with ASIC that include the relevant information, including:

  • The number of shares issued
  • The date of share issue
  • The amount paid for each share, and
  • The names and addresses of new shareholders.

 

Companies must report share issues or any changes to the member register to ASIC within 28 days of the issue, otherwise late fees will apply.

 

Key takeaways

  • Issuing shares means to create new shares in your company which people can purchase or otherwise acquire.
  • Companies must follow the correct process in issuing shares, as set out in the company’s governing documents.
  • Companies must report any share issue to ASIC by filling out and lodging the required forms.

 

Gladwin Legal are experts in commercial law and have extensive experience in advising businesses. If you require assistance in drafting shareholders agreements, issuing shares or ensuring legal compliance, please contact us at or 1300 033 934.