You commonly need to create a new share class when issuing options through an Unapproved or EMI Scheme, or when issuing shares outside of a funding round, this guide will take you through the step by step process on how to do this on SeedLegals, including creating all the approval documents that you will need!
Please note, if you’re creating a new share class during a funding round you won’t need to use this product. All the share class approvals are also included in the funding round documents. If you’re creating your share class as part of your EMI scheme then you will need to create your share class as soon as possible and this is the guide for you for!
When creating a new share class, the two documents you will need are:
Board Resolution: this provides the Board minutes asking the shareholders for permission to create the new share class.
Shareholders Resolution: this provides the shareholder approval. It requires at least 50% of the shareholder voting rights to pass.
Using SeedLegals you can create these documents for a new share class quickly and easily, it will only take a few minutes to create!
Step 1: Check what additional approvals you need to create a new share class
Before you proceed with creating a share class, you should see if any additional consent is required to create the share class (e.g. investor consent). This will be detailed in your Articles of Association and Shareholders Agreement.
If you are unsure please reach out to your scheme owner or through the chat bubble and we’d be happy to help!
And if you are still on the Model Articles of Association no need to worry about this step - you will just need the normal board and shareholders approval!
Step 2: Where to find the create a new share class on your company profile
You can create a new share class in two ways:
Firstly, go to the ‘Shares’ tab on your navigation panel and select ‘Share Classes’.
Then select ‘+ New Shares’ as seen above. In the pop up side panel, select ‘Add new share class, create approval documents’. Doing this will include a Shareholders Resolution and a Board Resolution.
Alternatively, within the ‘Shares’ Navigation panel select ‘Cap Table’. In the top right hand corner, click on the three vertical dots and select ‘Edit share classes’. From there, you can select ‘+ New Shares’ again as seen in the above diagram.
Step 3: Creating the share class and accessing the approval documents
Click confirm and a share class tab will appear asking whether you wish to add a class with documents or not:
If you are creating a share class that was created during incorporation, a previous off-platform funding round, or you have the required documents off-platform and need the share class to reflect that, select ‘Just add a new share class’.
If you need the additional Shareholders and Board Resolutions (i.e. generating a new Options Scheme or issuing shares outside of a funding round) then select ‘Add new share class, create approval documents’.
Once you hit confirm, the share class pop up will allow you to customise your share class. Here you can issue Founder, Employee, Investor Ordinary or Preferred shares with a range of entitlements such as voting rights, transfer rights and dividends. It will also allow you to set the terms of any anti-dilution rights or liquidation preferences.
Please note, in some instances additional documents may be needed, for example when creating a more senior class of shares than the current existing shares. If this is the case, please contact the SeedLegals team using the chatbot in the bottom right hand corner of your screen.
Step 4: Create and share your documents!
Now you have entered the share class, you can create, sign and share your Board Resolution and Shareholder Resolution documents!
Once you are happy with the Resolutions you can go ahead with obtaining all the necessary signatures.
To do so, you can select ‘Share’ as seen in the below diagram to invite the signatories to sign electronically, or you can select ‘View’ in the below diagram followed by ‘View signatures’ to mark the documents as signed offline if they were signed off platform.
You can access the share class and Resolution documents at any time by returning to the ‘Share Classes’ tab from ‘Shares’ in your navigation panel.
Step 5: How to edit/delete a share class
If at any point you wish to edit or remove the share class and/or the approval documents, click on the 3 vertical dots by the share class.
This could be for a number of reasons, such as shareholders not agreeing to the proposed entitlements of the share class, added clauses that may need to be added to the Shareholders Resolution, or simply a mistake when drafting the share class.
Step 6: File the shareholders resolution with Companies House
Finally, do not forget to file the new shareholders resolution with Companies House! For more information on how to do this, check out our article on How to upload your documents to Companies House.
For more information please see: