How do shares work when registering a company?
When registering a company, you'll need to decide how ownership of the company will be divided between shareholders. This is done through shares.
Don't worry if you're not familiar with shares - for most new companies, the setup is quite straightforward.
What are shares?
Shares represent ownership in a company.
The more shares a person owns, the larger their ownership stake in the company. For example, if a company has 100 shares on issue and one person owns 50 shares, they own 50% of the company.
What is a share class?
A share class determines the rights attached to a share, such as voting rights and rights to dividends.
Most small businesses and startups register with a single class of Ordinary Shares, which generally gives all shareholders the same rights.
Unless you've received advice to do otherwise, Ordinary Shares will usually be the simplest option.
What does "number of shares issued" mean?
This is the total number of shares the company will issue when it is registered.
There is no required number of shares. The number simply determines how ownership is divided between shareholders.
Many companies choose 120 Ordinary Shares because this makes ownership percentages easy to calculate.
What does "amount paid per share" mean?
This is the amount that has been paid for each share.
For most new companies, shareholders enter $1.00 per share.
For example:
- 120 shares issued
- $1.00 paid per share
- Total share capital: $120
What does "amount unpaid per share" mean?
This is any amount that remains payable on a share.
For most company registrations, this is entered as $0.00, meaning the shares are fully paid.
How do I allocate shares to shareholders?
The total number of shares allocated to shareholders must equal the total number of shares issued by the company.
For example:
- One shareholder with 100 out of 100 shares = 100% ownership
- Two shareholders with 50 shares each out of 100 shares = 50% ownership each
- Two shareholders with 75 and 25 shares out of 100 shares = 75% and 25% ownership
What do most companies choose?
For many small businesses, a simple setup is:
- Ordinary Shares
- 120 total shares
- $1.00 paid per share
- $0.00 unpaid per share
- Shares allocated between shareholders based on the intended ownership percentagesFor example, if two founders want equal ownership, they may issue 120 shares and allocate 60 shares to each founder.
Can I change my share structure later?
Yes. A company can issue additional shares, transfer shares between shareholders or update its ownership structure after registration.
However, changes to a company's share structure can have legal, tax and administrative implications, so it's a good idea to think carefully about your intended ownership structure before lodging your application.
Learn more
For more information about shares and company ownership, see: