Allocating shares to directors at your Australian company

By Vivian Michael | Company

Allocating shares to directors at your startup

Allocating shares to directors at your startup? Here are some useful tips to help you.

1. Shares instead of a director's service fee

If you have launched your startup with another director and with little or no funding,  it is likely that you have  thought about shares taking the place of a director's service fee, at least in the early stages. 

You can get a director's consent so they can receive shares in lieu of a director's service fee. 

2. A written agreement

It's a good idea to get a directors consent in writing to receive shares in lieu of a fee for services in the initial stages. A director's service agreement is a good place to do this.

3. Shares not mandatory

Are you considering allocating shares to a new director that has come on board after the company has been set up?

While a director does not have to be to shareholder, it does make sense to allocate shares to a director to incentivise them to work towards the long term growth and success of the company. 

4. The share allocation

To complete the share allocation,  you may need to refer to your existing constitution or shareholder agreement as they will usually spell out requirements for the share allocation.

We have a bonus for our readers, we have included forms that you may need to complete the allocation. These are:

  • Application form - a share application form for the director to apply for the shares
  • Allotment resolution - to record a decision made at a meeting to allocate the shares; and
  • Share certificate - a certificate that is given to the director that records the shares allocated


Useful downloads: application, resolution, register & certificate.


About the Author

Vivian Michael is a lawyer and founder of Michael Law Group. Vivian's mission is to make quality business legal services accessible to entrepreneurs launching in Australia that would otherwise DIY, rely on legacy contracts or go without.

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