Shares within a company and how they differ

When it comes to shares within your business, it is often the case that there may only be one class of shares; however, there are multiple classes that your business can have at once.

Different classes of shares will hold different voting, dividend and capital rights and the owner(s) of each company can decide how to classify the shares issued based on each investor or sometimes the relationship between the shareholders.

There are four main classes which are set out below.

Ordinary shares

Ordinary shares are the most common class and allow shareholders equal rights when it comes to voting, dividends and any other factors associated with the shares.

You can create different classes of ordinary shares, so as to take into account any small differences needed between them.

An example of this would be to vary dividend amounts paid to the shareholders despite them all holding ordinary shares.

Non-voting shares

As the name suggests, non-voting shares give no voting rights within the shares. This is often the class given to employees as a tax-efficient way to pay dividends but without the full rights of ordinary shares.

Non-voting shares can also be given to your family members who have an interest in your company and its value but are not involved enough to need to vote.

Redeemable shares

This class of shares can be viewed as a temporary one. They are given out on clear terms that they may or will be taken back in the future.

In some cases, there would be a specific date that these shares are to be bought back on.

It may be a good idea to make employees’ shares redeemable as this would allow you to take them back if an employee leaves the company.

However, there are restrictions on redeeming these shares – you can only redeem them out of accrued profits or from the earnings of new shares being issued. This may be something to keep in mind when considering this class of shares.

Preference shares

These shares carry a preferential right to a fixed dividend, which is displayed as a percentage of the share’s value.

This is still only payable out of profits regardless of the percentage chosen.

Preference shares are also commonly non-voting and are another option often given to family members of company shareholders.

For more help or advice on related matters, please get in touch with one of our Corporate Partners, Maung Aye, on +44 (0) 20 7240 0521 or at


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Maung Aye
Maung is a partner in our Corporate and Commercial department. He joined Mackrell.Solicitors following corporate law positions in London and in a leading regional firm in Essex. Maung read European Legal Studies at Lancaster University and the Università degli Studi di Trento and is a fluent Italian speaker.