Exercise by directors of power to allot shares etc
‘(1) The directors of a company must not exercise any power of the company—
(a) to allot shares in the company, or
(b) to grant rights to subscribe for, or to convert any security into, shares in the company,
except in accordance with section (Power of directors to allot shares etc: private company with only one class of shares) (private company with single class of shares) or section (Power of directors to allot shares etc: authorisation by company) (authorisation by company).
(2) Subsection (1) does not apply—
(a) to the allotment of shares in pursuance of an employees’ share scheme, or
(b) to the grant of a right to subscribe for, or to convert any security into, shares so allotted.
(3) If this section applies in relation to the grant of a right to subscribe for, or to convert any security into, shares, it does not apply in relation to the allotment of shares pursuant to that right.
(4) A director who knowingly contravenes, or permits or authorises a contravention of, this section commits an offence.
(5) A person guilty of an offence under this section is liable—
(a) on conviction on indictment, to a fine;
(b) on summary conviction, to a fine not exceeding the statutory maximum.
(6) Nothing in this section affects the validity of an allotment or other transaction.’. —[Margaret Hodge.]