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Registering a company

What are the different types of share?

Ordinary: As the name suggests these are the ordinary shares of the company with no special rights or restrictions. They may be divided into classes of different value.

Preference: These shares normally carry a right that any annual dividends available for distribution will be paid preferentially on these shares before other classes.

Differential share rights/values: Differential share rights/values: It is also possible to customise the rights of ordinary shares to create differential voting and/or dividend rights. Commonly, this is done by creating A, B and C shares (and so on) out of the ordinary share stock, with each share class being allocated rights as required.

When making such an arrangement it is important to think the matter through in terms of what the company wants to achieve, but without attempting to use legal jargon.

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