Share capital is the total nominal value of the shares a company has issued. If a company issues 500 shares at £1 each, its share capital is £500 (GOV.UK's own example, as of October 2026). It isn't the company's value, and it isn't the cash in the bank.
That last point is the one GOV.UK spells out: share capital isn't linked to how much the company is worth. A company with £100 of share capital can be worth millions. What share capital does tell you is how many shares exist, what they're nominally worth, and how much shareholders could still be asked to pay.
Nominal value, issued and allotted
Three terms do most of the work. Section 542 of the Companies Act 2006 says every share in a limited company must have a fixed nominal value, and an allotment of a share without one is void. Shares can be in any currency, and different classes can use different currencies.
Section 546 separates allotted share capital (shares a person has acquired the right to) from issued share capital (shares that have been issued). Both include the shares taken by the founders when the company was formed.
The four figures on your statement of capital
You file a statement of capital when you form the company and every time you allot new shares. Section 10 says it must state:
| Figure | What it means | Worked example |
|---|---|---|
| Total number of shares | Every share the company has | 500 |
| Aggregate nominal value | Number of shares times nominal value | £500 |
| Aggregate amount unpaid | What shareholders still owe on their shares | £0 if fully paid |
| Per class: prescribed particulars, number and nominal value | The rights each class carries | 500 ordinary shares, one vote each |
The unpaid line is the one founders forget. If you've issued shares and nobody has paid for them, the company is owed that sum, and GOV.UK says shareholders will need to pay in full if the company has to shut down.
How directors issue new shares
Adding share capital means allotting new shares. The rules depend on how many classes you have:
- If the company is private and has only one class of shares, section 550 lets directors allot more of that class unless the articles prohibit it.
- Otherwise, section 551 says directors need authority from the articles or a resolution, stating the maximum number of shares and an expiry date no more than five years away.
- Offer the new shares to existing ordinary shareholders first. Section 561 gives them a right of pre-emption in proportion to what they already hold.
- Set the price at or above nominal value. Section 580 says shares must not be allotted at a discount, and the buyer has to pay the shortfall with interest if they are.
- File a return of allotment with a fresh statement of capital within one month (section 555).
Payment doesn't have to be cash. Shares can be paid for in kind, including goodwill and know-how, though public companies face extra valuation rules.
Every legal way to change share capital
Section 617 says a limited company may only alter its share capital in these ways:
- Increase it by allotting new shares.
- Reduce it under Chapter 10. A private company limited by shares can do this by special resolution supported by a solvency statement; any company can do it by special resolution confirmed by the court (section 641).
- Sub-divide or consolidate shares, for example turning one £1 share into 100 shares of 1p.
- Reconvert stock into shares, or redenominate shares into another currency.
Anything outside that list, such as just declaring that share capital is now higher, has no effect. Once the change is made, it shows up in your next confirmation statement.
A quick example with two founders
Say two founders form a company with 100 ordinary shares of £1 each, 50 each, and pay for them in full. The statement of capital shows 100 shares, £100 aggregate nominal value and nothing unpaid. A year later an investor wants in. The directors can allot 25 new ordinary shares under section 550 if there's still only one class, but they've first got to offer them to the two founders under section 561 unless pre-emption has been disapplied. Once the investor's shares are allotted, the company files a return within a month showing 125 shares and £125 of share capital. The investor's price can be far higher than £1 a share; anything above nominal value is a premium, and it doesn't change the share capital figure.
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Why it matters for small companies
For a one-person company, share capital is usually a formality: one or a hundred £1 shares. It starts to matter the moment you bring in a co-founder or investor, because the number of shares decides voting control and how dividends are split. Getting it right at formation is far easier than fixing it later. My guide on registering a company in the UK shows where these figures go.
My verdict
Keep the nominal value low, make sure every share is paid up, and never allot shares without checking pre-emption and filing within a month. Share capital is a small number on paper, but it's the number that decides who owns and controls your company.
Frequently asked questions
What is share capital in simple terms?
It's the total nominal value of the shares a company has issued, for example 500 shares at £1 each gives £500 of share capital.
Is share capital the same as what a company is worth?
No. GOV.UK says share capital isn't linked to how much the company is worth.
What is issued share capital?
Section 546 of the Companies Act 2006 says issued share capital means shares of the company that have been issued, including the shares taken by the founders on formation.
Do I need to tell Companies House when I issue new shares?
Yes. Section 555 says you must file a return of allotment with a statement of capital within one month of allotting shares.
Can shares be issued below their nominal value?
No. Section 580 says shares must not be allotted at a discount, and the buyer must pay the discount with interest if they are.
Can a private company reduce its share capital?
Yes. Section 641 allows a private company limited by shares to reduce it by special resolution supported by a solvency statement, or any company by special resolution confirmed by the court.
Do existing shareholders get first refusal on new shares?
Usually. Section 561 says new equity securities must first be offered to existing ordinary shareholders in proportion to their holdings.
