Is there a minimum share capital for a private company

Q: How does this look in practice?

Illustration only. Priya forms a consultancy with 100 ordinary shares of 1p each, paid in full, giving share capital of £1. She lends the company £10,000 to cover start up costs, recorded in her director's loan account. A supplier checking the filed accounts sees share capital of £1 and a creditor of £10,000 owed to the director. If the company later needs a larger contract, Priya could convert part of the loan into new shares at a premium, increasing equity without changing her percentage holding, and file an SH01 within one month as section 555 requires.

Q: What mistakes come up?

Thinking the old £100 default is a legal minimum. It is a habit from formation packages, not a rule. Treating share capital as a reserve of cash. It is a historic figure. Issuing new shares below nominal value. Section 580 makes the allottee pay the discount. Forgetting the return of allotment. Every allotment needs an SH01 with a statement of capital. Assuming a plc can trade on incorporation. It needs its trading certificate first. Company directors can protect the business against the cost of an HMRC check with tax investigation insurance, which pays up to £100,000 of accountant's fees with Solar Protect. Read how our cover works or get a quote.

No. A private company limited by shares needs at least one issued share, and that share can have any fixed nominal value, so a share capital of one penny is lawful. Only a public company has a statutory minimum: allotted share capital of at least £50,000 or the prescribed euro equivalent before it can trade.

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What does the law actually require for a private company?

The Companies Act 2006 sets out three things that together define the floor.

At least one member. Section 7 says a company is formed by one or more persons subscribing to a memorandum of association.
At least one share each. Section 8 says the memorandum states that the subscribers agree to become members and, for a company with a share capital, to take at least one share each.
A fixed nominal value. Section 542 says every share must have a fixed nominal value, and an allotment of a share without one is void. The Act does not set a minimum figure.

GOV.UK’s guidance on setting up a limited company puts it simply: the price of an individual share can be any value, and you need at least one shareholder. A sole founder taking one ordinary share of 1p meets every statutory requirement. In practice most small companies use £1 or 1p shares; our page on nominal value explains the choice.

What is the minimum for a public company?

Section 763 defines the authorised minimum for a public company’s allotted share capital as £50,000 or the prescribed euro equivalent. The Companies (Authorised Minimum) Regulations 2009 set that euro equivalent at €57,100. Section 765 says the test must be met either wholly in sterling or wholly in euros, ignoring shares in other currencies.

The minimum bites in two places:

A company formed as a plc must not do business or exercise borrowing powers until Companies House issues a trading certificate under section 761, which requires the nominal value of allotted share capital to be at least the authorised minimum.
A private company converting into a plc must meet the same minimum when the special resolution is passed, under section 91.

Section 586 adds that a public company must not allot a share unless at least one quarter of its nominal value and the whole of any premium is paid up. So a plc with exactly £50,000 of nominal capital must have received at least £12,500 of it.

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Does a private company have to be paid for its shares at all?

Shares do not have to be paid for on the day they are issued unless the articles say so. Article 21 of the model articles for private companies requires shares to be fully paid on issue, but expressly excludes shares taken by the subscribers on formation. Many formation agents therefore show subscriber shares as unpaid. Under section 3, members of a company limited by shares are liable for the amount, if any, unpaid on their shares, so an unpaid £1 share leaves the holder owing £1 if a liquidator calls for it. Our page on partly paid shares covers the consequences.

What a company cannot do is issue shares for less than their nominal value. Section 580 prohibits allotment at a discount and makes the allottee liable for the shortfall with interest.

What does share capital tell lenders and suppliers?

Share capital is public. The statement of capital filed on incorporation and with every later allotment shows the number of shares, their aggregate nominal value and how much is unpaid, and the balance sheet in filed accounts shows called up share capital. Credit analysts, banks and trade suppliers look at it, but they read it with some care:

It is not a cash balance. £100 of share capital paid in 2015 tells you nothing about what the company holds today.
It shows what owners have committed. A company with £1 of share capital and large director loans has funded itself by debt the director can call back. A company with £50,000 of share capital has money that cannot be returned to owners except through a formal reduction of capital or buyback procedure, and section 830 limits distributions to accumulated realised profits.
It caps the owners’ exposure. Because liability is limited to amounts unpaid on shares, a fully paid £1 share means the shareholder has nothing further at risk. That is why lenders to small companies so often ask for personal guarantees.

A small share capital is therefore normal and not a warning sign on its own. What a credit reviewer looks at is net assets, and whether the owners’ money in the business is share capital or a loan they can withdraw.

Should a new company issue more than the minimum?

Reasons to put in more than a nominal sum include:

tenders and frameworks that ask for minimum net worth;
regulated activities where a regulator sets its own capital requirement, which is separate from company law;
wanting the founder’s money to be permanent equity rather than a loan, to strengthen the balance sheet.

Reasons to keep it low include flexibility: money lent to the company can be repaid freely, whereas share capital is locked in. Many owner managed companies use a small share capital plus a director’s loan. Our guide to funding your company by loan or shares compares the two, and how many shares to issue covers splitting shares between founders.

How does this look in practice?

Illustration only. Priya forms a consultancy with 100 ordinary shares of 1p each, paid in full, giving share capital of £1. She lends the company £10,000 to cover start up costs, recorded in her director’s loan account. A supplier checking the filed accounts sees share capital of £1 and a creditor of £10,000 owed to the director. If the company later needs a larger contract, Priya could convert part of the loan into new shares at a premium, increasing equity without changing her percentage holding, and file an SH01 within one month as section 555 requires.

What mistakes come up?

Thinking the old £100 default is a legal minimum. It is a habit from formation packages, not a rule.
Treating share capital as a reserve of cash. It is a historic figure.
Issuing new shares below nominal value. Section 580 makes the allottee pay the discount.
Forgetting the return of allotment. Every allotment needs an SH01 with a statement of capital.
Assuming a plc can trade on incorporation. It needs its trading certificate first.

Company directors can protect the business against the cost of an HMRC check with tax investigation insurance, which pays up to £100,000 of accountant’s fees with Solar Protect. Read how our cover works or get a quote.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.