Share subscription money: record investor cash before issuing the shares

When an investor subscribes for new shares, the company receives cash in exchange for creating new equity. The bank receipt is only one step. Directors need authority to allot the shares, the corporate records must show the investor and share class, and Companies House generally needs the return of allotment within one month.

Agree the subscription terms before receiving money

Use a subscription agreement, investment agreement or other appropriate corporate documents stating investor, amount, price per share, share class and completion conditions.

A bank transfer labelled "investment" is not enough to determine legal ownership. Finance should know whether funds are refundable pending completion or become company money immediately.

Directors need legal authority to allot the shares

Check the Companies Act, articles and existing shareholder resolutions before allotment. Pre-emption rights can also require existing shareholders to be offered shares first unless validly disapplied.

Corporate counsel or the company secretary should confirm authority before the board records the allotment. Finance should not issue share certificates solely because money arrived.

Match each investor receipt to the subscription schedule

Use clear bank references and reconcile total cash received to the legal closing schedule. If 20 investors subscribe in one round, maintain investor-by-investor amount, share count and receipt date.

Investigate short payments, bank charges and money arriving from a different person or entity. AML and investor documentation should explain the payer where it differs from the subscriber.

Record the allotment and update the statutory registers

Once the board validly allots the shares, update the register of members and cap table and issue share certificates under the company's process.

The legal allotment date can differ from the bank-receipt date if funds were held pending completion. Accounting and company-secretarial records should use the actual transaction chronology.

Companies Act section 555 gives one month to file the return of allotment

Section 555 of the Companies Act 2006 requires a limited company to deliver a return of allotment within one month after making the allotment, accompanied by a statement of capital. Companies House uses form SH01 for this purpose.

Put the filing deadline into the closing checklist. A fundraising round is not administratively complete when cash arrives.

Split nominal share capital from share premium where required

If shares are issued above nominal value, the excess is generally credited to the share premium account under Companies Act section 610 rather than ordinary revenue.

Keep the bank receipt, cap table and accounting journal tied together. Future investors and auditors should be able to trace every pound of subscribed capital to the shares issued.

Worked example: three investors subscribe £400,000, £300,000 and £300,000 for a £1 million round. Finance should see three expected receipts and three matching subscription records, not simply one target total. If the £300,000 payment arrives from an investor's holding company instead of the named subscriber, pause and confirm the legal and KYC position before marking the subscription complete.

Use a closing funds-flow statement showing expected investor cash, legal fees, platform deductions if any and the amount that should remain in the company bank account. This avoids confusion where advisers are paid directly from closing proceeds or where funds sit temporarily with solicitors or a platform.

After SH01 filing, reconcile the public statement of capital to the internal cap table. A fundraising round is easy to remember when it is new, but years later a buyer or auditor will rely on the permanent records. The bank receipt, board allotment and Companies House filing should tell the same story.

Where completion uses solicitors' client account or an investment platform, reconcile both the intermediary statement and the final company bank credit. The legal subscription can be fully funded even though the company's bank sees one net transfer after fees. Keep enough evidence to explain why gross subscribed capital differs from net cash received on closing day.

Do not spend funds that remain conditional. Some rounds close only when a minimum total is reached, consents are obtained or documents are signed. If money arrives early and is refundable if conditions fail, treasury should label it accordingly rather than treating it as unrestricted company capital immediately.

Where investments arrive in foreign currency, agree whether the subscription amount is legally fixed in sterling or in the foreign currency and how conversion is handled. The bank receipt can differ from the expected sterling value because of FX movement and fees. The cap table should follow the legal subscription terms, not whatever sterling amount happens to appear after conversion.