UK company formation with a single class of shares is straightforward and can be completed by any company formation agent. It is also possible to form a company with multiple classes of share. This is a more sophisticated process, which is usually provided by corporate law firms and providers of company secretarial services.
There are a number of reasons why you might want to form a company with more than one class of share. You may, for example, want multiple classes so that:
– you have total control over the amount and timing of dividend payments to each shareholder,
– certain shareholders have no voting rights or enhanced voting rights,
– certain shareholders have no right to a return of capital on winding up,
– certain shareholders receive preferential treatment such as the right to a fixed dividend or a return of capital ahead of other shareholders.
Ordinary shares are often divided into ‘A’ ordinary, ‘B’ ordinary, ‘C’ ordinary, etc classes if those classes are to have broadly the same rights, with slight variations such as having the ability to declare a different dividend on each class. As a further example, if a class of shares receives preferential treatment such as the right to fixed dividends or return of capital ahead of other shareholders then those shares are normally labelled as ‘preference’ shares. It should be noted that the name of a share class is intended to be descriptive only, it does not dictate the rights attached to those shares and can be misleading – beware.
There may be tax efficiencies in having multiple share classes for your company; you should consult your tax adviser in this regard. If you are forming a company yourself, rather than through a solicitor, company secretarial services provider or a company formation agent then please note that the details 會計公司費用 of the rights attached to each class of share will need to be stated on form IN01 (company formation application).
Forming a company with multiple share classes or creating a new share class after formation requires the adoption of appropriate Articles of Association setting out the rights of each share class. Standard model form Articles of Association are not appropriate. Please note that drafting Articles of Association is a specialist skill which should be undertaken by an experienced professional.
Creating a new class of share after formation requires a special resolution of the members (unless the Articles impose a stricter requirement) to adopt new Articles of Association. A form SH08 (notice of name or other designation of shares) will also need to be filed at Companies House. You may also require the consent of the holders of existing classes of share. If an allotment of shares happens at the same time (as is often the case) then appropriate Board and Members resolutions will need to be passed in addition to filing form SH01 (return of allotment of shares). Form SH01 requires information regarding the allotment, the revised share capital of the company and details of the rights attaching to each class of shares.