What are the different types of shares a limited company can issue?

1

Hiya, I am wanting to set up a limited company in the UK - but I’m completely foreign where company formation is concerned. We’re going to have three shareholders, ideally, which each taking different sized roles in the way the company is actually run. So, I was wondering whether each shareholder could be given a different kind of share. Is that possible? And if so, what kind of shares can a company issue?

Answers

1

Ordinary shares are the preferred class of share issued by most limited companies in the UK. Each share carries equal rights - one vote at general meetings, the right to receive dividends and the right to capital distribution if the business is wound up.

However, there are lots of different share classes available if shareholders want to offer varied rights to different people. The most common types of alternative shares include:

  • Preference - Right to receive dividend payments before all other share classes
  • Non-voting - Right to dividends but no right to vote at general meetings
  • Redeemable - Enables the company to back the shares after a set period of time
  • Deferred ordinary - Right to dividends after all other share classes
  • Management - Multiple voting rights per share
  • Alphabet - Ordinary shares that allow differential rates of dividends to be paid.

If you plan to issue any share class other than ordinary, you will not be able to adopt the Model articles of association - you will have to alter the articles to include details of the other share classes. If you wish to issue different share classes after company formation, you should include the articles as altered when you submit the ‘Return of Allotment of Shares’ at Companies House.

a year ago
 

Your answer