Revocation of Directors' Authority
Section 550 of the Companies Act 2006 gives the directors of private company power to allot shares where there is only one class of share. The directors may exercise this power to:
- Allot shares of that class, or
- Grant rights to subscribe for or to convert any security into such shares
Except to the extent that they are prohibited from doing so by the company's articles.
It is important to note however that the directors must be authorised to exercise these powers either by the company's articles or by resolution of the company. This authorisation may be given for a particular exercise of the power or for its exercise generally, and may be unconditional or subject to conditions.
Authorisation must state the maximum amount of shares that may be allotted under it and specify the date on which it will expire, which must be not more than five years from:
- In the case of authorisation contained in the company's articles at the time of its original incorporation, the date of that incorporation;
- In any other case, the date on which the resolution is passed by virtue of which the authorisation is given.
Authorisation may be renewed or further renewed by resolution of the company for a further period not exceeding five years, and be revoked or varied at any time by resolution of the company.
A resolution renewing authorisation must:
- State (or restate) the maximum amount of shares that may be allotted under the authorisation or, as the case may be, the amount remaining to be allotted under it, and
- Specify the date on which the renewed authorisation will expire.
A resolution of a company to give, vary, revoke or renew authorisation under this section may be an ordinary resolution, even though it amends the company's articles.