Classes of Private Limited Company Shares

  • Price: £3.60
  • Published: March 2015
  • Type: Business Information Factsheet
  • Format: PDF

Most private limited companies only have one class of shares, called 'ordinary shares'. However it has become quite common for private companies to have more than one class of shares. A 'share' is a unit of ownership of a company, representing a fraction of the company's share capital.

Different classes of shares enable shareholders to be provided with differing rights depending on which sort of share they own. There are a variety of reasons why a company might choose to have more than one class of shares. For example, to create non-voting shares, to create shares with extra voting rights, or to create shares for their employees.

This factsheet provides an overview of different classes of shares and their purposes. It also explains the procedures that companies must use if they decide to vary the rights attached to different classes of shares.

The issuing of shares and the rights of shareholders are complex areas of company law and company directors should always seek guidance from a professional adviser before making any decisions. For more information about issuing shares, see BIF 177, A Guide to Understanding Shareholdings in a Private Company.

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