Here are some notes about the class of share capital of a company in detail:
A company’s share capital is divided into different classes, each with its own rights and privileges. The most common classes of share capital are:
- Ordinary shares: Ordinary shares are the most basic class of share capital. They typically have voting rights and the right to receive dividends.
- Preference shares: Preference shares have priority over ordinary shares in terms of receiving dividends and in the event of a liquidation. However, they do not have voting rights.
- Deferred shares: Deferred shares are a type of preference share that has a lower priority than other preference shares. They typically do not have voting rights and may not receive dividends until all other classes of shares have been paid.
- Redeemable shares: Redeemable shares are shares that can be bought back by the company at a specified price.
- Non-redeemable shares: Non-redeemable shares are shares that cannot be bought back by the company.
The different classes of share capital can be used to give different investors different levels of rights and privileges. For example, a company might issue preference shares to investors who want a guaranteed income, while issuing ordinary shares to investors who want more control over the company.
The specific rights and privileges of each class of share capital are set out in the company’s articles of association. The articles of association are a document that sets out the company’s governing rules.
Here are some additional things to consider when choosing the classes of share capital for your company:
- The rights and privileges that you want to give to your investors.
- The type of investors that you want to attract.
- The tax implications of different classes of share capital.