Last updated: 11 September 2026
The question is not which route is simpler, it is where the value should land. A share allotment puts new equity and any consideration into the Irish company, while a share transfer moves existing equity and usually puts the consideration in the selling founder's pocket.
For a non-resident founder or a sole shareholder admitting a co-founder to an Irish LTD, that distinction controls the outcome. The choice affects dilution, authority, pre-emption, CRO filings, share certificates, stamp duty and possible tax exposure. The comparison below applies to the Republic of Ireland and focuses on the Companies Act 2014, Revenue requirements, the Companies Registration Office and beneficial ownership administration.
What is bringing a co-founder into an Irish company share allotment vs share transfer really about?
Are you deciding where the value should land, in the Irish company or in the existing founder's pocket? That is the issue when admitting a co-founder to an Irish LTD. An allotment creates new shares. The company issues equity to the incoming co-founder, receives the consideration, and increases its issued share capital. Existing shareholders are diluted because the total number of shares rises.
A transfer moves existing shares. The company creates no additional equity, the issued total remains unchanged, and consideration generally goes to the founder who sells or gives the shares. Only that founder's holding falls. Use an allotment when the co-founder's cash, intellectual property or completed work should strengthen the company. Use a transfer when an existing founder is handing over part of a personal holding and no value is being paid into the business.
The legal routes are distinct. Sections 69 and 70 of the Companies Act 2014 govern allotment authority, pre-emption and the B5 filing. Section 94 governs transfers, including the written transfer instrument, alongside the constitution and any applicable shareholders' agreement. Section 69 pre-emption applies to allotments, not transfers.
A breach of pre-emption does not automatically make an allotment void. It can create a breach of the Act, constitution or shareholder arrangements, with consequences that must be addressed before proceeding. Confirm the company's authority and any restrictions before directors approve the issue.
CRO treatment is also commonly misunderstood. An allotment is reported using Form B5 within 30 days of the allotment, with Form B7 only where authorised share capital changes. A transfer is not filed with the CRO when it happens. The membership change is reported on the next annual return, Form B1.
Stamp duty is the immediate financial distinction. An allotment is not a transfer, so transfer stamp duty does not arise on the issue itself. A share transfer generally attracts 1 per cent, charged on the consideration on a sale and on the market value on a gift, subject to exemptions and reliefs recognised by Revenue, as set out in its rates for shares and marketable securities.
Why does the distinction matter to a non-resident founder?
A non-resident founder may manage the company remotely while directors, statutory registers and filings are handled across borders. The co-founder's nationality or residence does not change a transfer into an allotment, and becoming a shareholder does not make that person a director.
If the company has no EEA-resident director, maintain compliance with section 137. An EEA-resident director or a section 137 bond is required under the Companies Act 2014. A founder reviewing Irish company formation arrangements can examine the non-resident company formation package before changing ownership.
How do share allotment and share transfer compare side by side in Ireland?
| Criterion | Share allotment | Share transfer |
|---|---|---|
| Share count | Creates new shares and increases the issued total | Moves existing shares and leaves the issued total unchanged |
| Who is diluted | All existing shareholders are diluted by the new issue | Only the transferring shareholder is diluted |
| Where consideration goes | Into the company | To the selling or transferring shareholder |
| Authority needed | Authorisation under section 69, by ordinary resolution or the constitution, followed by director action where applicable | Written instrument under section 94, subject to the constitution and any applicable transfer restrictions |
| Pre-emption | Statutory pre-emption may apply to an allotment to a non-member, unless displaced or excluded under the Act, constitution, special resolution or terms of issue | Section 69 pre-emption doesn't apply; transfer restrictions or pre-emption must come from the constitution or shareholders' agreement |
| CRO filing | Form B5 within 30 days of allotment; Form B7 only where authorised capital itself changes | No CRO form at the time of transfer; the membership change is reported on the next annual return, Form B1 |
| Stamp duty | No stamp duty arises on the allotment itself because it isn't a transfer | Generally 1 per cent of consideration or market value, whichever is higher, subject to exemptions and reliefs |
| Certificates | Certificate ready within 2 months after allotment | Certificate ready within 2 months after a duly stamped, valid transfer is lodged |
| Seller tax exposure | No sale by the founder, although other tax questions can arise from the consideration or the co-founder's circumstances | The seller may have a capital gains tax exposure, which needs advice |
The table shows why neither route is universally superior. An allotment avoids transfer stamp duty and puts value into the business, but it creates dilution and brings a firm CRO deadline. A transfer preserves the share count and can implement a founder-to-founder reallocation, but it requires a proper instrument, stamping where applicable and careful register administration.
Revenue confirms that a transfer instrument is generally charged at 1 per cent, calculated by reference to consideration or market value, whichever is higher. The small-value exemption applies only where consideration doesn't exceed EUR 1,000 and the instrument is certified as not forming part of a larger transaction or series exceeding that amount.
A transfer isn't filed with the CRO when signed. The company must register it only after receiving a proper instrument, and the public record generally reflects the membership change through the next annual return. That misconception causes avoidable delays because founders wait for a CRO transfer form that doesn't exist.
How do you bring a co-founder in by allotment of new shares in Ireland?
An allotment should be handled as a corporate issue, not as an informal promise of ownership. The company must establish authority before the co-founder acquires an unconditional right to be entered in the register of members.
What authority is needed before an allotment?
Section 69(1) provides that shares may not be allotted unless the allotment is authorised, specifically or under a general authority, by ordinary resolution or by the constitution. Where the constitution states an authorised share capital, section 69(2) requires the shares to come from the authorised but unissued capital.
Unless the constitution provides otherwise, section 69(4) gives the directors the power to allot on the terms and at the times they consider to be in the company's and shareholders' best interests. A director who knowingly contravenes those provisions commits a category 3 offence under section 69(5).
Statutory pre-emption is the next checkpoint. Under section 69(6), before allotting shares to a non-member, the company must first offer a proportionate number of shares of the relevant class to existing holders on the same or more favourable terms. The acceptance period must be not less than 14 days.
The constitution may contain its own pre-emption provision meeting the statutory minimum, which can displace section 69(6) under section 69(8). Section 69(12) also identifies circumstances where section 69(6) doesn't apply, including where the constitution, a special resolution or the terms of issue provide otherwise, and where the consideration is wholly or partly non-cash. That non-cash point matters where the co-founder contributes intellectual property or work already done.
What must be filed after the shares are allotted?
Under section 70(6), shares are allotted when the person acquires the unconditional right to be included in the register of members. The company must deliver the prescribed allotment particulars to the Registrar within 30 days under section 70(7), using Form B5. Failure to file is a category 4 offence under section 70(8).
An allotment inside existing authorised capital needs the B5. A Form B7 arises only where the authorised capital itself changes, by ordinary resolution under section 83.
Practical rule: Missing the pre-emption process doesn't automatically invalidate the allotment. Sections 70(9) and 70(10) preserve the allotment's validity, but the company and every officer who knowingly authorised or permitted the breach can be jointly and severally liable to compensate the person who should have received the offer.
The company must also update its statutory records and have the share certificate ready within 2 months after the date of allotment under section 99(2). A director arrangement that satisfies section 137 is a separate governance matter from the allotment itself, and adding a shareholder never settles it.
How do you bring a co-founder in by transfer of existing shares in Ireland?
A transfer begins with the existing shareholder's decision to move part of an existing holding. Section 94(1) permits a member to transfer all or any shares by an instrument in writing in any usual or common form, or another form approved by the directors, subject to the constitution and the Act.
The constitution must be read before anyone signs. Any restriction on transfer, director approval requirement or contractual pre-emption right comes from the constitution or a shareholders' agreement. Section 69 pre-emption has nothing to do with a transfer of existing shares.
What does the transfer instrument need to do?
The transferor signs the instrument under section 94(2). If the shares aren't fully paid, both transferor and transferee must execute it. The instrument must be delivered to the company before registration, because section 94(4) prevents the company from registering a transfer without a proper instrument.
The transferor remains the holder until the transferee's name is entered in the register under section 94(3). The register of members is governed by section 169, and section 170 provides that no notice of any trust is entered on it. Section 94(8) preserves the application of the Stock Transfer Act 1963, so a stock transfer form is a recognised Irish instrument where appropriate.
There is no CRO form for a share transfer at the time it happens. The company records the new member internally, and the change is reported on the next annual return, Form B1. The absence of an immediate CRO filing doesn't remove the need for a valid instrument, stamping and register updates.
When must the transfer be stamped?
Revenue generally charges 1 per cent of consideration or market value, whichever is higher. Where the parties are connected or the transfer is a gift, market value rather than a lower stated consideration can be relevant. Revenue's own instruction is to file the return and pay the duty within 44 days of the date of execution, meaning signing, sealing or both, and late filing carries a surcharge on the unpaid duty.
No transfer should be registered until the instrument is stamped or an exemption applies. Where consideration doesn't exceed EUR 1,000, the small-value exemption may apply only if the instrument is certified as not forming part of a larger transaction or series exceeding EUR 1,000. Associated companies relief under section 79 of the Stamp Duties Consolidation Act 1999 and reconstructions relief under section 80 should be considered where relevant.
Where the shares derive their value from immovable property in the State, the rate Revenue publishes is 7.5 per cent instead of the standard 1 per cent, and that case requires advice. A transfer may also give the seller a capital gains tax exposure.
The company must have the certificate ready within 2 months after the transfer is lodged, but section 99(3) means the transfer must be duly stamped where appropriate and otherwise valid. An unstamped transfer doesn't start the certificate clock.
Where the instrument, the stamping position and the register entries need to be handled as one piece of work, that is what a share transfer service covers.
What does 20 per cent for a co-founder look like by allotment versus by transfer?
Assume an Irish company has 100 ordinary shares of EUR 1 each, all held by the founder, and the target is a 20 per cent holding for the incoming co-founder.
With an allotment, the company must issue 25 new shares:
- Existing shares: 100
- New shares issued: 25
- New total: 125
- Co-founder's holding: 25
- Calculation: 25 ÷ 125 = 20 per cent
The founder now holds 100 of 125 shares, or 80 per cent. The co-founder's consideration goes into the company, no transfer stamp duty arises on the issue itself, and the company must file Form B5 within 30 days. The important point is that the percentage is calculated against the new total, not the original 100 shares.
With a transfer, the founder transfers 20 of the existing 100 shares:
- Existing shares: 100
- Shares transferred: 20
- Total after transfer: 100
- Co-founder's holding: 20
- Calculation: 20 ÷ 100 = 20 per cent
The founder retains 80 shares, and the total issued share count doesn't change. The consideration goes to the founder, stamp duty generally applies at 1 per cent of consideration or market value, whichever is higher, and payment and return are due within 44 days of execution. There's no CRO filing at the time of transfer, with the membership change appearing on the next annual return.
The cheaper immediate route can produce the less useful capital structure if the company needs cash, recognises a non-cash contribution or wants the new co-founder's value to fund the business.
A ready-made company with existing ownership and tax arrangements is a separate transaction from adding a co-founder to an operating Irish LTD. It shouldn't be treated as a substitute for analysing the company's actual allotment or transfer position.
Which route should you choose when adding a co-founder to an Irish LTD?
Where should the new co-founder's value go, into the company or into the existing founder's pocket? That question usually determines the correct route.
| If the facts are… | The stronger starting point is… |
|---|---|
| Cash is being paid into the business | Allotment |
| Intellectual property or completed work is being contributed to the company | Allotment, with non-cash consideration reviewed |
| The founder is selling or giving part of an existing holding | Transfer |
| The issued share count should remain unchanged | Transfer |
| Transfer stamp duty should be avoided | Allotment |
| The company can meet the CRO filing deadline | Allotment |
| The parties do not want an immediate CRO filing | Transfer, subject to execution, stamping and register updates |
Choose an allotment when the incoming co-founder is funding the business or contributing an asset or completed work that should benefit the company. The consideration goes to the company, and transfer stamp duty does not arise on the issue itself. The trade-off is dilution for existing shareholders, plus the need to address authority, statutory pre-emption and Form B5 within 30 days.
Choose a transfer when an existing founder is deliberately reallocating a defined portion of their holding and the company does not need the consideration. The issued share count stays unchanged, but the payment goes to the selling founder. Transfer stamp duty will generally apply, and the seller may face a capital gains tax issue. A transfer is not filed at the CRO when it happens. The company records the change and reflects the new membership on its next annual return.
Do not confuse a pre-emption problem with an invalid allotment. Breaching applicable pre-emption rights does not automatically void the allotment. It can create a separate compliance or shareholder remedy issue, so the rights must be checked and properly dealt with before the shares are issued.
Check the constitution before choosing either route. Section 69 concerns allotments. A transfer falls outside that provision, but the constitution or a shareholders' agreement can still restrict transfers or impose pre-emption rights.
For governance planning, a shareholders' agreement drafted for Irish law is the right instrument. A template written for another jurisdiction will not reflect the Companies Act 2014, and it does not replace advice on the company's constitution, tax position or statutory filings.
A shareholder does not automatically become a director. Appointment as a director is a separate corporate decision, with separate duties and filings. Record ownership and management roles independently.
What deadlines and checklists keep an Irish share allotment or transfer compliant?
The deadlines are different, so the company should record the relevant date immediately.
| Action | Deadline |
|---|---|
| File Form B5 after an allotment | Within 30 days after the date of allotment |
| Return and pay transfer stamp duty | Within 44 days of execution |
| Have certificates ready after allotment | Within 2 months after allotment |
| Have certificates ready after transfer | Within 2 months after a duly stamped, valid transfer is lodged |
| Update beneficial ownership information | Within 14 days where the change crosses the relevant 25 per cent threshold |
Where a co-founder crosses 25 per cent, or an existing owner drops below it, the beneficial ownership register must be updated within 14 days of the change under S.I. No. 110 of 2019. The company should also check whether its beneficial ownership records accurately reflect control and ownership.
What should the allotment checklist contain?
- Authority: Confirm the constitution or ordinary resolution authorises the allotment.
- Capital: Check that the shares are available within authorised but unissued capital where that structure applies.
- Pre-emption: Apply, displace or document the statutory position before issuing to a non-member.
- Records: Approve the terms, update the register and prepare the certificate.
- CRO: File Form B5 within 30 days.
What should the transfer checklist contain?
- Restrictions: Read the constitution and shareholders' agreement for transfer controls.
- Instrument: Execute and deliver a proper written instrument.
- Stamping: Determine the duty, exemption or relief and complete the required certification.
- Register: Enter the transferee only after the instrument is valid and any required stamping is complete.
- Annual return: Ensure the change is reflected in the next Form B1.
Assembling the questions and documents in advance shortens the professional review, but it doesn't replace Irish legal or tax advice for a transaction.
Recordkeeping point: The company should retain the resolution or approval, signed instrument where relevant, evidence of stamping or exemption, register updates, certificate record and any RBO analysis together.
What is the current annual return window?
The annual return window is 56 days from the annual return date under section 343, never 28 days. A late annual return can put the audit exemption at risk.
Audit exemption: Section 363, as substituted by section 22 of the Companies (Corporate Governance, Enforcement and Regulatory Provisions) Act 2024 and commenced on 16 July 2025 by S.I. No. 325 of 2025, applies a two-strike test: the exemption is lost for the two financial years immediately following a financial year where the annual return for that year was late AND an annual return was also late in any of the five financial years immediately preceding it. The first annual return after incorporation is disregarded, and so is any late filing that occurred before 16 July 2025.
The practical next step is to identify whether value should go into the company or to the existing founder, then have the constitution, ownership percentages, authority, stamping position and filing dates checked before signing or issuing anything. Chern & Co (RegisterCompany.ie) can support Irish company formation and related statutory administration, including Irish resident company formation where the structure is being set up from the start, and the Chern & Co (RegisterCompany.ie) website provides a route to discuss the appropriate service for the company's circumstances.
What is the difference between an allotment and a transfer in Ireland?
An allotment creates new shares, increases the issued total and puts the consideration into the company. A transfer moves existing shares, leaves the issued total unchanged and generally puts the consideration with the transferring founder.
Does an Irish share allotment attract stamp duty?
No transfer stamp duty arises on the allotment itself because an allotment isn't a transfer. The company must still comply with section 69 authority and pre-emption requirements and file Form B5 within 30 days.
Is a share transfer filed with the CRO when it happens?
No. There is no CRO form for a share transfer at the time of transfer. The company needs a proper written instrument, must deal with stamping or exemption, update its register and report the membership change on the next annual return.
What happens if allotment pre-emption is breached?
The allotment remains valid. Under sections 70(9) and 70(10), the company and every officer who knowingly authorised or permitted the breach can be jointly and severally liable to compensate the person who should have received the offer.
Bringing in a co-founder who is also outside the EEA? Our company formation package for overseas founders covers both at incorporation.
This content is general guidance, not legal or tax advice.
