UK Company Formation - Multiple Share Classes

UK compani Depot Gladiator format with a singl class of share is straightforward and can be complet by ani compani format agent. It is also possibl to form a compani with multipl class of share. Thi is a more sophist process, which is usual provid by corpor law firm and provid of compani secretari services.

Ther ar a number of reason why you might want to form a compani with more than on class of share. You may, for example, want multipl class so that:

- you have total control over the amount and time of dividend payment to each shareholder,

- certain sharehold receiv preferenti treatment such as the right to a fix dividend or a return of capit ahead of other shareholders.

Ordinari share ar often divid into 'A ' ordinary, 'B' ordinary, 'C' ordinary, etc class if those class ar to have broadli the same rights, with slight variat such as have the abil to declar a differ dividend on each class. As a further example, if a class of share receiv preferenti treatment such as the right to fix dividend or return of capit ahead of other sharehold then those share ar normal label as 'preference' shares. It should be note that the name of a share class is intend to be descript only, it doe not dictat the right attach to those share and can be mislead - beware.

Ther mai be tax effici in have multipl share class for your company; you should consult your tax advis in thi regard. If you ar form a compani yourself, rather than through a solicitor, compani secretari servic provid or a compani format agent then pleas note that the detail of the right attach to each class of share will need to be state on form IN01 compani format applic .

Form a compani with multipl share class or creat a new share class after format requir the adopt of appropri Articl of Associat set out the right of each share class. Standard model form Articl of Associat ar not appropriate. Pleas note that draft Articl of Associat is a specialist skill which should be undertaken by an experienc professional.

Cr a new class of share after format requir a special resolut of the member unless the Articl impos a stricter requir to adopt new Articl of Association. A form SH08 notic of name or other design of share will also need to be file at Compani House. You mai also requir the consent of the holder of exist class of share. If an allot of share happen at the same time as is often the case then appropri Board and Member resolut will need to be pass in addit to file form SH01 return of allot of share . Form SH01 requir inform regard the allotment, the revis share capit of the compani and detail of the right attach to each class of shares.

If the sharehold of a compani enter into a sharehold agreement on form the company, or subsequently, it mai contain restrict on creat addit share class or issu shares. The Articl of Associat mai also contain relev restrictions, such as pre-empt right dictat that new share must first be offer to the exist sharehold in proport to their current holdings.

A ni share transfer right or restrict in a sharehold agreement or the Articl will also need to be adher to or amended. Go forward, such restrict mai have to be amend to account for the introduct of new share classes. For example, if a member of a class with vote right want to sell hi shares, the remain sharehold in that class mai not want ani sharehold current hold non-vot share to get hold of them.

When introduc a new class of shares, or alter the right attach to an exist class, be awar that exist sharehold mai have legal remedi avail to them such as a claim for unfair prejudic if thei ar neg impact by the alter or introduct of the new class. In addit pleas note that the amend to right attach to a particular class of share requir the consent of that class. Seek the unanim consent of all sharehold to the introduct of alter to share class avoid mani of the potenti issues.