You incorporated alone, built an early product and now want a second founder to join. The company already exists, so the question is no longer how to put two names on a formation application. It is how the incoming person will acquire the agreed ownership in the existing business.
The first decision affects funding, dilution, approvals and tax: will the company issue new shares, or will an existing shareholder transfer some of theirs? This guide is for founders of an ordinary Irish private company limited by shares, or LTD. Official sources were checked on 24 October 2026. It is general information, not a valuation, transaction document or personal legal or tax opinion.
Choose the route by purpose, not by the easiest form
An allotment creates new shares. A transfer moves shares that already exist between holders. They can produce the same final percentage but are not interchangeable transactions: a cash subscription normally puts funding into the company, while a purchase from an existing shareholder normally pays that seller.
If your aim is to finance development and give the new founder an ownership interest, assess an issue by the company. If the agreement is that the original founder sells part of an existing holding, assess a transfer. Gifts, non-cash contributions and combined investment-and-sale deals need their own analysis.
Write down who receives each payment and why. A payment to the original founder's personal account should not be casually recorded as subscription money received by the company. The commercial agreement, banking evidence and company records need to tell the same story.
| New share issue | Existing share transfer |
|---|---|
| Company creates shares | Holder transfers shares |
| Total shares increase | Total shares stay unchanged |
| Subscription funds company | Sale price normally pays seller |
| CRO Form B5 | Next B1 records transfer |
Calculate the percentage after the transaction
Suppose the company has 100 issued ordinary shares and wants the newcomer to own 25%. Issuing 25 new shares does not achieve that: the newcomer would hold 25 out of 125, which is 20%. The denominator increases when the company creates shares.
For a clean 25% new issue example, start with 120 existing shares and issue 40 new shares. The newcomer then holds 40 of 160, or 25%, and the original holder has 75%. By contrast, transferring 25 of 100 existing shares gives the newcomer 25% without changing the total. These are arithmetic examples, not recommended capital structures.
These calculations assume one class of identical ordinary shares and no options or convertible instruments. Agree whether the promised percentage means today's issued capital or a fully diluted position after planned awards or investment. Confirm voting, dividend and capital rights separately; a share-count percentage alone does not promise a board seat or veto.
- Prepare a before-and-after ownership table showing each holder, class and number of shares.
- Record the agreed target percentage and check it against the resulting total.
- Separate nominal value, subscription or purchase price, and the business valuation.
- Get advice before changing classes or reorganising shares to make the numbers work.
Check authority and existing shareholder rights before promising shares
For a new issue, Section 69 requires allotment authority in the constitution or an ordinary resolution. Where the constitution states an authorised share capital, check the available unissued amount. Do not assume that being the sole director gives unrestricted authority to create whatever shares the deal needs.
Pre-emption rights may require a proportionate offer to existing shareholders before an outside allotment. Statutory exceptions or disapplication can matter, and the constitution, existing share terms and any shareholders' agreement also need review. Do not treat a friendly verbal agreement as evidence that every required consent or process has been completed.
A transfer needs a separate review of restrictions and registration requirements. Under Section 94, a proper transfer instrument must be delivered to the company; the outgoing holder remains the holder until the incoming person is entered in the register. Ask the adviser to map the actual approvals rather than treating a signed stock transfer form as the whole transaction.
Deal with work, intellectual property and departures in the same conversation
A founder contributing future work creates a different bargain from someone paying cash now. Agree expected time commitment, responsibilities, ownership of new work, any pre-existing intellectual property being contributed, and what happens if the person leaves after three months.
Vesting, leaver clauses, reserved decisions and dispute arrangements need documents aligned with the constitution and the actual share rights. Do not assume that the company can simply take shares back if the relationship ends, or that resignation as a director automatically returns an ownership stake.
Put the agreed commercial brief in writing before asking for implementation. A useful brief distinguishes what is paid immediately, what depends on future milestones, and which conditions must be met before ownership changes. Have a solicitor advise on enforceability and suitable documents; a routine filing order is not a substitute for designing the founder relationship.
Review tax before choosing a nominal or discounted price
Revenue distinguishes an issue of new shares, on which Stamp Duty does not apply, from transfers of existing shares that may attract Stamp Duty. That does not make a new issue free of all tax consequences. A sale or gift can also require a review of the outgoing holder's tax position and any reliefs or exemptions.
If shares are awarded in connection with employment, free or discounted awards can create taxable remuneration. Revenue's employee guidance measures the benefit using market value, or the discount from that value, and explains payroll and share-award reporting. The exact treatment depends on the person's role and transaction; not every incoming co-founder has the same status.
Nominal value is not market value. A company with little revenue may still own valuable software, contracts or other assets. Before calling an award 'sweat equity', obtain a supported valuation and advice on the contribution, restrictions and tax timing. This guide does not assume that a relief or employee share scheme is available.
Complete the transaction and statutory records on the right dates
For an allotment, Section 70 treats shares as allotted when the person acquires the unconditional right to be entered in the register of members. The return of allotments is due to the CRO within 30 days after allotment. Establish the legal completion date with the adviser; a bank transfer, certificate date and agreed joining date are not automatically the same event.
For an ordinary transfer, CRO guidance says the change is reflected in the next annual return rather than notified immediately through a B5. The stock transfer instrument is not a CRO form and should not be sent to CRO as if it were an allotment return. Tax compliance may have its own steps and timing.
Update the register of members, paid-up information and supporting resolutions, and arrange the relevant certificates. Section 99 generally requires certificates to be ready for delivery within two months of allotment or lodging a valid transfer, subject to the statutory conditions. A spreadsheet cap table is useful, but it is not the statutory register of members. Do not backdate documents to match an informal promise.
Reassess beneficial ownership, including an exactly 25% holding
After the change, review every relevant person's beneficial ownership, not just the incoming founder. An allotment can dilute an existing holder, and voting arrangements or control through other means may affect the assessment even where the share arithmetic looks straightforward.
The RBO share-ownership test is more than 25%, not 25% or more. Exactly 25% does not satisfy the share-ownership test alone, but voting rights and control through other means still need assessment. Do not use a 25% number as a promise that no beneficial-ownership work is required.
Keep the internal beneficial-ownership register and central RBO requirements separate from the register of members and CRO filings. A B5 or B1 does not update the RBO. Our linked guide to updating beneficial ownership after a share change explains the separate records and timing.
Appoint a director only if that is also agreed
The incoming shareholder may also become a director, but the appointments are separate. Check eligibility, consent and the company's officer requirements before making that decision. CRO requires a post-incorporation director change to be notified on Form B10 within 14 days.
Agree bank mandates, signing authority and the working arrangement separately too. Share ownership does not itself establish an employment contract, permit someone to operate a regulated activity, or grant immigration permission to work in Ireland. Resolve any relevant permissions before the person starts the proposed role.
Give the provider a decision-ready implementation brief
Send the company name and CRO number, constitution, current registers, share classes and paid-up details, existing agreements, intended final split, contribution details and proposed timing. Identify any options, prior promises or investor rights. Use the provider's secure process for personal information rather than sending unnecessary identity documents in an initial enquiry.
StartCompany.ie's Allotment of Shares service covers preparation of a board resolution, updated share register, CRO Form B5, new share certificates and updated company records. Confirm suitability and the total payable against the current service page before ordering. A share transfer is a different service.
A routine allotment order does not automatically include a bespoke shareholders' agreement, vesting design, valuation, tax advice, director appointment or complex investment documentation. Where the route is undecided, discuss it first and ask which specialist work is needed before filing support can begin.
- Agree the route, rights, contribution and final ownership table.
- Complete legal, tax and valuation checks before committing to dates.
- Confirm the required authority, approvals and any pre-emption process.
- Complete the issue or transfer and update statutory records.
- Diary the applicable B5 or next B1, RBO work and any separate B10.
- Keep the signed documents, payment evidence and final ownership table together.
StartCompany.ie service
Allotment of Shares
Official information and next steps
Official sources checked on 24 October 2026. This guide addresses an ordinary Irish LTD and does not replace advice on your constitution, ownership arrangements, valuation or tax position.
- Companies Act: Section 69, allotment authority and pre-emption
- Companies Act: Section 70, allotment date and the 30-day return
- CRO: share capital, allotments, transfers and resolutions
- Companies Act: Section 94, transfer instruments and registration
- Revenue: Stamp Duty on shares and new share issues
- Revenue: disposing of an asset by sale, gift or exchange
- Revenue: employee share awards, valuation, payroll and reporting
- Companies Act: Section 169, the register of members
- Companies Act: Section 99, delivery of share certificates
- RBO: identifying beneficial owners and the more-than-25% test
- CRO: officer changes and Form B10