Preference
shares and redeemable shares
Preference shares and redeemable shares are most commonly
used when there is a third party investment in the company.
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Preference
shares:
- usually give their
holder priority in relation to the payment of dividends and the repayment
of capital on a winding up.
- often carry the
right to a fixed dividend each year eg: to 4% per annum. This dividend
may be cumulative (which means that if it is not paid in year, the obligation
on the company to pay it remains and interest may also accrue on the
amount unpaid.)
- may be non-voting,
or may only have the right to vote if the payment of their preference
dividend is in arrears or in relation to certain key issues which may
affect the preference shares eg: on a resolution to wind up the company
or to change the rights attaching to the preference shares.
Redeemable
shares:
- are shares which
entitle the holder to have his capital contribution repaid to him, so
they effectively operate as a type of loan.
- may only be issued
if the company also has non-redeemable shares in issue. A company may
never only have redeemable shares in issue.
- can be redeemed
on specific dates or by notices given by the company or by the holder
of the redeemable shares, depending on the rights that are set out in
the articles.
These two concepts
can also be combined to create redeemable preference shares eg shares
which have priority in terms of dividend and capital but which are redeemable
after a certain period of time has passed.
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Jordans'
services
Our preference shares and redeemable shares service includes:
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- redesignation of
the authorised share capital into the different share classes, including
any necessary increase of share capital and the preparation and filing
of all necessary minutes, resolutions and statutory forms.
- re-drafting of
the articles of association to include the rights and restrictions attached
to each share class, together with a clause by clause commentary.
- On completion of
the creation of the preference share or redeemable share you will receive
6 bound copies of the memorandum and articles of association.
We can also provide
documentation to issue and
allot any new shares that are required. An additional fee will be
payable.
Next step
Our fees for the creation of preference shares and redeemable shares start
at £525 + VAT. Download
our information sheet and order form.
Additional fees for the issue and allotment of shares, when combined with
this service, start at £50 + VAT.
For more information on our preference and redeemable shares service please contact
our Corporate Legal Services team.
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