If so, wouldn't this be unfair against shareholders as this would devalue their shares and voting rights?

  • please specify which jurisdiction Commented Sep 3, 2019 at 12:05
  • I'm in Australia
    – Anthony
    Commented Sep 3, 2019 at 12:06

2 Answers 2


Not in

Changes in shareholding of private companies require the approval of all existing shareholders.

However, in general (for private and public companies), shares are issued for something of value to the company - cash or something else - and therefore of value to the existing shareholders. The directors (and shareholders in private companies) need to decide if this is in the company’s best interest.

  • Thanks dale. What about public companies? Do they still require approval from ALL shareholders?
    – Anthony
    Commented Sep 3, 2019 at 10:04
  • When you say approval from all shareholders do you mean 100% or some sort of majority?
    – Joe W
    Commented Feb 22, 2022 at 3:05
  • 1
    @JoeW for private companies-100% but there can only be a maximum of 50 shareholders in a private company
    – Dale M
    Commented Feb 22, 2022 at 7:03

Yes in the US. Boards are constrained by the certificate of incorporation and by state law restrictions on necessary approvals.

But in the situation you're describing, board members are most constrained by their fiduciary duties (and accompanying personal liability). Directors have a duty of care: they can't be ignorant and neglect to sort out the company's value and then issue shares well below fair market value. Directors also have a duty of loyalty: they can't issue shares to themselves at below fair market value to the detriment of the other shareholders.

Fiduciary duties are what keep this from being a problem among normal companies. Grifty management/boards occasionally do it because, well, grift.

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