INTRODUCTIONThis case deals with company law and more particularly share capital in relation to the allocation and transfer of shares. With reference to the Companies Act 2006 and relevant case law, we hope that a reasoned conclusion will be reached on the issues put forward by Verity. ALLOCATION OF SHARES The general provisions relating to the allotment of shares are found in sections 549 to 551 of the Companies Act 2006. and there are different provisions depending on the type of company concerned. Directors of a limited company cannot exercise their powers to allot shares in the company under section 549 of the Companies Act 2006; however, directors of a limited liability company can only exercise their share allotment powers if the company manages only one class of shares. In section 551 of the Companies Act 2006, it states that the company must obtain authorization by means of a provision set out in the company's articles of association or by means of an ordinary resolution if the provisions are not available in the statuses. As part of the authorization, it must specify the maximum number of shares to be allocated as well as the duration of the allocation which cannot exceed five years. If the company fails to obtain this approval, affected directors who “knowingly contravene, or permit or authorize a breach of” this authorization, under section 549 of the Companies Act 2006, commit an offence. If he is found guilty, the responsibility falls on him personally but does not invalidate the attribution. In this particular case, the focus is on section 550 of the Companies Act 2006, as it is a limited liability company which only owns ordinary shares. Before the shares have been put on paper, the shareholders do not wish to buy any of them. Furthermore, the transfer is also legal to the extent that proper procedures are followed in effecting the transfer.QUOTESDodds v Cosmopolitan Insurance Co [1915] SC 992 (IH)Hackney Pavilion Ltd [1924] 1 Ch 276, ReMcLintock v Campbell [1916 ] SC 966 (IN)Rayfield v Hands [1960] Ch 1Zinotty Properties Ltd [1984] 3 All ER 754, ReBIBLIOGRAPHYBlack, G et al. (2011), Business Law in Scotland, (2nd ed.), London, W GreenCrossan, SJ and Wylie, AB (2010), Introductory Scots Law Theory and Practice, (2nd ed.), Paisley, Hodder EducationErvine, C. ( 2013), Core Statutes on Company Law, (13-14 ed.), Palgrave MacMillanHicks A. and Goo, SH (2008), Cases and Material on Company Law, (6th ed.), New York, Oxford University PressPillians, B and Bourne, N. (2012), Scottish Companies Act 2/e, Routledge.