(1)A public company must not allot shares as fully or partly paid up (as to their nominal value or any premium on them) otherwise than in cash unless—
(a)the consideration for the allotment has been independently valued in accordance with the provisions of this Chapter,
(b)the valuer's report has been made to the company during the six months immediately preceding the allotment of the shares, and
(c)a copy of the report has been sent to the proposed allottee.
(2)For this purpose the application of an amount standing to the credit of—
(a)any of a company's reserve accounts, or
(b)its profit and loss account,
in paying up (to any extent) shares allotted to members of the company, or premiums on shares so allotted, does not count as consideration for the allotment.
Accordingly, subsection (1) does not apply in that case.
(3)If a company allots shares in contravention of subsection (1) and either—
(a)the allottee has not received the valuer's report required to be sent to him, or
(b)there has been some other contravention of the requirements of this section or section 596 that the allottee knew or ought to have known amounted to a contravention,
the allottee is liable to pay the company an amount equal to the aggregate of the nominal value of the shares and the whole of any premium (or, if the case so requires, so much of that aggregate as is treated as paid up by the consideration), with interest at the appropriate rate.
(4)This section has effect subject to—
section 594 (exception to valuation requirement: arrangement with another company), and
section 595 (exception to valuation requirement: merger or division ).
Cases considering section 593 (6)
[2022] EWCA Civ 1040 · 22 July 2022Disapplies
Section 593 does not apply to shares taken by a subscriber on formation because those shares are not allotted by the company. The lower court’s liability finding under this provision was therefore reached by the wrong route (see paras [94]-[104]).
The requirement for a valuer’s report to be made to the company before allotment cannot operate in relation to subscriber shares, which are held by automatic operation on incorporation before the company can receive such a report (see paras [101]-[102]).
[2017] EWHC 2877 (Ch) · 14 November 2017Interprets
Section 593(1) prohibited the allotment of the shares as fully or partly paid otherwise than in cash without an independent valuation and the required report. No compliant valuation report was provided. (see paras [82]-[83]; [91])
Section 593(3) made the allottee liable for the nominal value and any premium where the statutory valuation requirements were contravened and the relevant conditions were met. The court held Mr Nasir liable for the nominal value with interest. (see paras [82]; [91])
Section 593 operates subject to section 594. The court therefore considered whether the alleged arrangement fell within the statutory exception before imposing liability under section 593(3). (see paras [82]-[91])
[2025] EWHC 3395 (Ch) · 23 December 2025
The court noted that a statutory auditor’s report valuing consideration for the allotment of equity had been obtained as a plan step. The provision was treated as part of the plan’s implementation requirements rather than as a contested issue. (see para [14])
What each judgment says about section 593 is in the case-law panel in the full Act.