Whilst most UK limited companies usually have one class of share, it is possible for a company to have two or more distinct groups of equities in existence at any one time by creating additional classes of shares. The individual rights relating to each class of share could potentially differ in one or more of the following ways:
- Their voting rights.
- Whether they can receive dividends.
- Pay-outs received on winding up.
There is a requirement that the Articles of Association refer to the class shares and their respective rights in relation to Dividends, Voting and Capital, we generally therefore arrange for replacement Articles of Association to be filed at Companies House, such Articles also being compliant with the Companies Act 2006
Statutory Companies House returns are generally filed electronically on your behalf and we will require the Company Authentication Code for this purpose
Updated Statutory Registers are not included
Changes in share ownership will not be visible on public record until a confirmation statement is filed at Companies House.
Class Shares - Frequently asked Questions
An individual Shareholder can hold more than one class of share in the same company and benefit from the rights which pertain to the multiple groups.
Tax can be a motivation in family companies, for instance- Family-owned companies often issue shares to spouses and other family members to allow the distribution of profits in such a way that allows them to utilise lower tax rates or take advantage of the £2000 annual dividend exemption. Classes of shares can be created for each family member as required and different dividends voted for each class of share. The shares issued need not have any voting rights.
Always seek legal and taxation advice on these matters. The consequences of not doing so can be expensive. If not done correctly, company owners can jeopardize the right to Entrepeneur’s Relief when they sell a company or pay higher rates of tax on distribution of profits or even lose control of their own companies.