Company formations

Should you incorporate with more than one class of share?

January 13, 2022 1:44 pm Published by
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Should you incorporate with more than one class of share?

Benefits of incorporating with class shares

Company formations

Incorporating with more than one class of share will, at least, allow you to issue differential Dividends between those holding shares in different classes. You can also go further to vary the voting rights, plus rights to equity on winding up.

Even if you are not ready to issue shares in different classes, you can incorporate with the share classes in place to allow you to issue shares in different classes in the future. Without this in place, you will need to amend the Articles and pass a Special Resolution before you can issue shares in different classes.

Can I incorporate with more than one class of share using Model Articles?

No. If you incorporate with Model Articles this does not allow you to incorporate with more than one class of share.

Can I use First Corporate to incorporate with more than one class of share?

Yes. We incorporate with bespoke Articles which allows for the incorporation with more than one class of share. If you would like to find out more about our formation service, please feel free to call 029 2022 9080, or email formations@fcls.co.uk

Share class Limits – why is it needed?

If you have incorporated your new company with First Corporate, utilising our bespoke Articles to incorporate your company with more than one class of share, you will have noticed each share class has a maximum number of shares each class can issue.

The limit is required to satisfy the requirements at 551(3)(a) of the act, which requires that where a company has more than one class of share, the directors need authorisation from the Articles to allot, and that authorisation must contain a maximum share issue limit.

If you do not have any limits, the directors cannot allot class shares. In order to issue shares, you would have to pass a Special Resolution to amend the Articles to set the limit and authorise the directors. Putting in share limits will make it an easier process to allot shares post incorporation. There is no maximum limit, you can choose any amount (more than you think will need to be allotted).

In cases where you do not provide a share limit, we will enter a limit of 10,000. In most cases this is more than enough to allot shares freely in the future.

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This post was written by Adrian Smart

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