Companies Act 2014 section 71

Payment of shares

Section 71 sets out the rules governing how shares may be paid for, prohibits the allotment of shares below their nominal value, and establishes the share premium account for any excess value received above nominal value.

• Shares may be paid up in money or money's worth, including goodwill and expertise, but must never be allotted at a discount to their nominal value.
• Any value received on the allotment of a share above its nominal value must be credited to a share premium account, which forms part of the company's undenominated capital.
• The share premium account may only be used for limited purposes: writing off preliminary expenses, share or debenture issue costs or commissions, or covering premiums on redemption of certain pre-existing redeemable preference shares or debentures.
• If shares are allotted in breach of these rules, the allottee — and potentially subsequent holders who knew of the breach — will be jointly and severally liable to repay the discount plus interest, and the company and its officers in default commit a category 3 offence.