Multiple
share classes
Companies may want to issue shares of different share classes
for various reasons:
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- To give different
voting rights to different shareholders or groups of shareholders eg:
having two share classes where the 'A' shares could have the right to
vote but 'B' shares have no voting rights.
- To give different
income rights to different shareholders or groups of shareholders eg:
having two share classes where 'A' shares could be entitled to a fixed
dividend every year whilst 'B' shares could only be entitled to a dividend
if the directors decided to declare one.
- To give different
capital rights to different shareholders or groups of shareholders eg:
having two share classes where the holders of 'A' shares may be entitled
to a repayment of the capital on a winding up of the company before
the holders of any other class of shares receive any payment of capital.
- To facilitate the
operation of share issue or share transfer provisions eg: having two
share classes where all 'A' shares could be offered to the other holders
of 'A' Shares to give them the chance to acquire them before they are
offered to the holders of 'B' shares.
- To provide special
rights to a shareholder or group of shareholders eg: having two share
classes where 'A' Shares could have the right to appoint and remove
a director, and enhanced voting rights on any resolution to remove the
director that they have appointed.
- To give consent
provisions to a shareholder or group of shareholders eg: having two
share classes where the consent of the holders of the 'A' shares may
be required if the sale of the company's business or a majority of the
company's assets is proposed.
Multiple share classes
are often used by:
- 'husband
and wife' companies – see also our note on the Arctic
Systems case.
- companies which
are owned by two or more groups of people eg: Mr and Mrs A and Mr and
Mrs B set up a company.
- to give special
rights to specific groups of people eg: investors or employees.
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Jordans'
services
Our multiple share classes service includes:
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- redesignation of
the authorised share capital into 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 share classes changes 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 multiple share classes start at £385
+ 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 multiple share classes service please contact
our Corporate Legal Services team.
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