A shareholder should pay the company for the total value of shares that they hold in the company. If they hold 1 share with a nominal value of £1, they should pay £1. If they hold 10 shares with a nominal value of £1,000, they should pay £10,000. And so on.

They can be paid for via a cash payment into the company’s business bank account. Alternatively, they may be able to provide a service, equipment, or perhaps shares in another company.

When should a shareholder pay?

This depends on what the articles of association say. Typically shareholders will need to pay at one of the below junctures:

• While the company is being formed
• At a date specified in the articles of association
• As soon as new shares are issued, or existing shares are transferred
• If the company has a debt to pay (the director can issue a ‘call’)
• If the company is wound up

Are there instances when a shareholder doesn’t have to pay for shares?

Yes, payment is not normally required if shares were given as a gift, inherited, or issued as part of an employee scheme.

But barring these instances, shareholders are normally required to pay for their shares. And because they are ultimately liable for this amount, we recommend issuing shares with a low nominal value when you are starting up.