C O M PA N Y SHARE STRUCTURES
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M A R K
The breakdown of share capital reflects
a
limited
company’s
ownership structure. With potentially different rights attaching to different classes of share, share structures are used to mirror the shareholders’ varying levels of investment, input and commitment. Most companies in the UK have a
predetermined
ordinary
shares
number at
of
formation,
with say £1 nominal value each. Nominal value does not necessarily represent a company’s true value. Companies are usually formed with
an
easily
divisible,
small
number of inexpensive shares which can be easily allocated to shareholders. Ordinary shares are often used for simple corporate structures and are equally proportional with respect to rights to dividends, voting powers and
rights
to
participation
in
distribution if the company is wound up. However, ordinary shares are not suitable in every circumstance, in which case the company may issue alternative share classes with different rights attached.
L Y T T L E T O N
M A R K
L Y T T L E T O N
Most companies in the UK have a predetermined number of ordinary shares at formation, with say £1 nominal value each. Alternative share classes include non-voting shares, which give the shareholder an economic right to dividends and other ownership rights without conferring power to make decisions within the company. Preference shares can be given precedence over other share classes when dividends are issued, entitling the shareholder to be paid before holders of lower classes of share, e.g. ordinary shares. In addition they might have additional rights on the sale or liquidation of a company. Alphabet shares, such as ‘Ordinary A Shares’, ‘Ordinary B Shares’ and ‘Ordinary C Shares’, can be used to differentiate between the different rights of each class of shareholder.
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