How To Get Shares In a UK Company: Options for Founders and Staff

If you’re building a UK business, shares can quickly become one of the most valuable tools you have.

You might be thinking about bringing on a co-founder, rewarding early hires, raising investment, or setting up a long-term incentive plan. In all of those situations, the same practical question comes up:

How do you get shares in a company – and, from a business owner’s perspective, how do you issue, transfer, or allocate shares legally and cleanly?

The short version is: there are a few well-established routes (issuing new shares, transferring existing shares, options, convertible instruments), and the “right” one depends on what you’re trying to achieve and the risks you’re trying to avoid.

This guide walks you through the main options for founders, employees and investors, with the legal and practical considerations you should think about before you move any shareholding around.

What Does It Mean To “Get Shares” In A UK Company?

In most UK small businesses, we’re talking about shares in a private company limited by shares (a “Ltd”). Shares are units of ownership. If someone gets shares, they may also get:

• Voting rights (ability to vote on major company decisions)
• Dividend rights (rights to distributions if the company pays dividends)
• Capital rights (rights to proceeds if the company is sold or wound up)
• Information rights (often expanded by contract, especially for investors)

In practice, when a business owner asks how you get shares in a company, they usually mean one of two things:

• Issuing new shares (the company creates new shares and allots them to someone), or
• Transferring existing shares (an existing shareholder sells or gifts some of their shares to someone else).

Those two routes can produce the same outcome (a new person becomes a shareholder), but legally they’re different - and the tax, control and paperwork can be very different too.

Before you do anything, it’s worth checking your company’s Company Constitution (your Articles of Association) and any shareholders’ agreement you already have in place. These documents often contain restrictions on share issues and transfers, and they can set out approval processes (for example, board consent, pre-emption rights, or “leaver” rules).

How Do You Get Shares In A Company (Legally And Properly) In The UK?

From a business owner’s perspective, there are a handful of standard “paths” you can use to give someone shares or allow them to acquire shares. Each path suits different situations.

1) Issue (Allot) New Shares

This is the most common route when the company is:

• bringing in a new co-founder,
• rewarding a key person with equity, or
• raising money from an investor.

When you issue new shares, the company creates additional shares and allots them to the new shareholder. This usually dilutes existing shareholders (because ownership is spread across more shares).

Typical legal steps include:

• checking the Articles and any existing Shareholders Agreement for restrictions and pre-emption rights,
• ensuring directors have authority to allot shares (and documenting decisions properly),
• agreeing the price (or “subscription amount”) and the share rights (ordinary shares vs preference shares),
• updating the company’s statutory registers and issuing share certificates, and
• filing the required Companies House forms (this typically includes filing Form SH01 for an allotment, within the required timeframe).

For investment rounds, the commercial terms are often documented in a Share Subscription Agreement, which sets out who is subscribing, how much they are paying, and key conditions (for example, deliverables before completion).

2) Transfer Existing Shares (Sale Or Gift)

Instead of issuing new shares, an existing shareholder can transfer some of their shares to someone else. This does not create new shares, so the company’s total number of shares stays the same.

You might consider a transfer where:

• a founder wants to bring in a new co-founder without diluting everyone else,
• an early shareholder is exiting, or
• shares are being gifted for succession planning (with tax advice).

Transfers commonly require:

• compliance with any transfer restrictions in your Articles and shareholders’ agreement (for example, board consent),
• a stock transfer form and (sometimes) stamp duty considerations (stamp duty is generally payable at 0.5% where the consideration is over £1,000),
• updating the register of members and issuing an updated share certificate.

Unlike share allotments, a share transfer typically doesn’t involve a specific Companies House filing just for the transfer itself. However, you may need to update Companies House if the transfer causes a change to your PSC (person with significant control) details or other required information.

If you haven’t documented transfer rules properly, you can end up with real headaches later - for example, a shareholder you can’t easily remove, or disputes about valuation and approvals.

3) Grant Share Options (A Right To Acquire Shares Later)

Options are different: the person doesn’t receive shares immediately. Instead, they receive a right to acquire shares in the future (often if they remain employed, hit milestones, or the business reaches a growth target).

This is often used for employee incentives, because it can:

• reduce upfront dilution,
• keep control stable early on, and
• align rewards with performance and retention.

If you’re considering option-based incentives, it’s worth getting advice early because the tax treatment can depend heavily on the plan structure. For startups, an EMI Options plan can be particularly attractive (subject to eligibility and HMRC requirements).

4) Use Convertible Instruments (Convert Later Into Shares)

Sometimes you don’t want to set a company valuation today (or you want to move fast). In that case, a convertible instrument can be used so the investor funds the company now, and later converts into shares - usually at the next funding round.

Common examples include:

• convertible loan notes, and
• advance subscription or other early-stage convertible-style instruments (these are more commonly used in the UK than US-style documents).

The details matter a lot (conversion triggers, discount rates, valuation caps, interest, repayment rights), so you’ll want clear documents from day one. Depending on the structure, you may consider a Convertible Note. In the UK, “SAFE notes” are sometimes used, but they’re not a standard UK legal instrument and often need careful UK-specific adaptation (including tax and company law considerations) rather than being used off-the-shelf.

These are commercial deals with legal consequences - so it’s worth getting them drafted carefully to avoid accidentally giving away more control than you intended.

Options For Founders: Splitting Equity And Adding Co-Founders

Founders usually deal with shares at two key moments:

• at incorporation (who owns what from day one), and
• when the team evolves (adding or removing founders, advisors, or early supporters).

Getting The Starting Split Right

If you’re incorporating and deciding how to allocate shares, don’t rush it. The “easy” split isn’t always the “safe” split, especially if contributions are uneven or roles may change.

Key decisions include:

• How many shares to create (for example 100, 1,000 or 10,000 ordinary shares - often chosen for simplicity and future flexibility)
• Who gets what percentage (and whether any shares should be reserved for an option pool)
• Whether shares should vest (so someone doesn’t walk away early with a large stake)

Vesting is particularly important for small businesses where each person’s contribution is critical. If you want a founder’s equity to “earn in” over time, a Share Vesting Agreement can help document the arrangement clearly (including what happens if someone leaves early).

Bringing In A Co-Founder Later

If your business is already operating and you’re adding a co-founder, you generally have three options:

• issue new shares to the new co-founder (dilutes everyone),
• transfer shares from an existing founder to the new co-founder (no dilution, but changes the selling founder’s stake), or
• use vesting or options so the equity is earned over time.

There’s no universal “best” answer. But you should treat this like a major structural change - because it is. When the business grows, equity decisions made casually at the start can become very expensive to fix.

Put The Rules In Writing (Before There’s A Dispute)

At a minimum, you’ll usually want to document things like:

• what decisions require shareholder approval,
• what happens if a founder wants to exit,
• how shares can be sold (and whether other shareholders get first refusal), and
• how you’ll deal with “good leavers” vs “bad leavers”.

This is where a properly drafted Shareholders Agreement becomes one of the most useful legal tools for a growing company - because it sets expectations while everyone is still aligned.

Options For Employees: Equity Incentives Without Losing Control

For many UK small businesses, equity incentives are a way to:

• compete for talent,
• retain key employees, and
• reward performance without over-stretching cash flow.

But as the employer, you also need to protect your business. Giving away shares too early (or on unclear terms) can create governance issues that slow you down later - especially if you end up with lots of small shareholders and no clear process for exits.

Common Equity Structures For Employees

In practice, you’ll usually choose between:

• share options (a right to buy shares later, often subject to vesting and conditions), and
• direct share issues (employees receive shares now, sometimes with restrictions).

Options are often the cleaner route for many SMEs because they can be structured to align with continued employment and performance milestones. If you’re employing staff, don’t forget equity incentives sit alongside your broader employment documentation (including confidentiality and IP ownership), which is typically managed through an Employment Contract.

Watch Outs: Tax, Voting Rights And “Small Shareholder” Problems

When business owners ask how to get shares in a company in an employee context, what they’re often really asking is: “How do we do this without creating a mess?”

Here are a few common pitfalls to avoid:

• Unclear share rights - if employees get voting shares, you may unintentionally complicate decision-making.
• No leaver provisions - if an employee leaves, you’ll want a clear mechanism for buying back or transferring their interest (and a fair valuation method).
• Surprise tax outcomes - tax can arise when shares are acquired at undervalue, or when options are exercised. This is an area where specialist tax advice is essential.
• Confidentiality and IP gaps - employees with equity often have deeper access to sensitive information. Make sure your documents match the reality of the role.

It can feel like a lot, but this is exactly why it’s worth setting your legal foundations early. If you plan the structure upfront, you can offer equity confidently - without compromising control or creating future disputes.

Options For Investors: Subscription, Share Classes And Convertibles

Investment is one of the biggest reasons shares change hands in a company. If you’re raising funds, the question of how to get shares in a company becomes: what is the investor getting, and what are you giving up in exchange?

Issuing Shares To Investors (Subscriptions)

Most equity investment involves the investor subscribing for new shares. The investor pays money to the company, and the company issues shares to the investor.

For small businesses, this is often documented with:

• a term sheet or heads of terms (commercial headline deal points),
• a Share Subscription Agreement (the legal mechanics of the share issue), and
• an updated shareholders’ agreement and/or revised Articles (to reflect investor rights).

Preference Shares And Special Rights

Investors sometimes want preference shares rather than ordinary shares. Preference shares may come with rights like:

• preferred return on exit (e.g. receiving certain proceeds before ordinary shareholders),
• anti-dilution protections,
• enhanced voting rights on certain matters, or
• dividend preferences.

This is not “bad” or “good” - but it does mean you should understand what you’re agreeing to, because it can affect founder control and the economics of a future sale.

Convertible Funding (Fast Funding, Later Equity)

If speed matters (or valuation is hard to agree), convertible instruments can be helpful. But they also shift complexity into the future.

As a business owner, you’ll want to be clear on:

• when conversion happens (next funding round, a long-stop date, a sale event),
• what discount or valuation cap applies,
• what happens if you never raise again, and
• whether the instrument can be repaid (and on what terms).

Those details are usually deal-critical, and they should be documented carefully - typically through a Convertible Note or similar investment document.

Don’t Forget The Compliance Basics

When you’re issuing or transferring shares, you’ll also need to keep an eye on the corporate admin. This includes:

• maintaining statutory registers (especially the register of members),
• issuing share certificates,
• updating Companies House filings where required (for example, allotment filings and any PSC changes), and
• making sure your internal approvals are properly documented (board minutes, shareholder resolutions where needed).

It’s not glamorous, but it matters. Clean records make due diligence smoother and reduce the risk of disputes about who owns what.

Key Takeaways

• “How do you get shares in a company” usually means either issuing new shares (allotment) or transferring existing shares - and each route has different dilution, control and paperwork consequences.
• Founders should treat early equity decisions as part of building strong legal foundations, especially where roles may change or a co-founder could leave early.
• Employee equity is often best handled through options or structured vesting so you can reward performance and retention without losing control too early.
• Investment rounds typically involve subscriptions for new shares, supported by clear documents (and often updated Articles and shareholder arrangements).
• Convertible instruments can speed up fundraising, but the conversion terms (discounts, caps, triggers and repayment rights) need to be drafted carefully to avoid nasty surprises later.
• Whatever route you choose, check your Articles and shareholder documents first - and keep your company registers and approvals properly recorded.

Important: This article is general information only and isn’t tax advice. Share issues, transfers and option plans can have significant tax consequences for both the company and the individual, so you should get advice from a qualified tax adviser on your specific situation.

If you’d like help issuing shares, setting up an option plan, or documenting an investment properly, you can reach us at 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat.