Multiple share classes, such as A, B and C Shares (also known as Alphabet Shares), offer a great deal of flexibility in providing different rights to different shareholders or groups of shareholders in a company.
There are three core rights attached to shares, the right to:
- receive dividends; and
- participate in the capital of a company on a winding-up (or otherwise).
By drafting appropriate articles of association, we have the ability to create additional classes of share and to assign appropriate rights to those classes. For example, by creating non-voting, non-dividend bearing, deferred or preference shares.
A practical example would be the provision of non-voting shares to employees or to family members of directors to allow the relevant shareholders to receive dividends without diluting the voting control of the company. There are a number of factors to consider here and please contact us to discuss.
For further details, please refer to our A and B Shares Service.