Irish companies generally have two different types of share capital – authorised share capital and issued share capital. Authorised share capital is simply the maximum amount of share capital that a company can issue to its shareholders. This amount will be displayed in the Memorandum of Association of the company and often in the Articles of Association as well. The amount of authorised share capital can be broken down in to shares of specific amounts which make up the entire authorised share capital of the company. For example, a company could have an authorised share capital of €100,000 divided into 100,000 shares of €1.00 each. Equally, as the company is free to divide its share capital in any manner that it wishes on incorporation (and free to chose the amount of its authorised share capital), it could also have divided this €100,000 into 20,000 shares of €5 each.

The company’s issued share capital, on the other hand, is the number of shares that it has issued to shareholders. In the case of most newly incorporated private companies, only one or two shares with nominal values of around €1.00 are issued on incorporation. One of the main reasons for this is that the liability of shareholders to account for the debts of a company is limited to the amount, if any, unpaid on their shares.

When it comes to incorporating your own company, we would typically suggest having a capital of €100,000 divided into 100,000 Ordinary Shares of €1.00 each and issuing a small number of shares to the subscribing shareholders in order to create the desired share structure. For example, if your company is to be a two shareholder company with each shareholder owning 50%, you could simply issue one share to each shareholder on incorporation. Similarly, if you have 3 shareholders and you plan to hold your shares in the ratio of 6:3:1, for example, then you could simply issue 10 shares to create your desired structure. Remember that you can also issue more shares after you have incorporated the company.

It will also be possible to issue shares to new and existing shareholders after the company has been incorporated. Details of all shares issued will usually (unless the company is unlimited) be filed in the Companies Office.