Alphabet Share

The term "alphabet shares" is widely used to describe different classes of shares denominated by a letter ("A shares", "B shares", etc.). Such shares can have whatever rights have been allocated in the company's articles attached to them or terms of issue. Alphabet shares are used for different purposes in different companies.

The use of alphabet shares could help a business to pay shareholders different amounts of dividends depending on what class of share they own, therefore the alphabet share arrangement allows for the board to distribute dividends other than on an equal pro rata basis between shareholders. The board can decide to apportion any dividend in whatever way the board decides between A, B, C, D etc. class shareholders on each occasion (even if one or more alphabet class may not receive any of the dividend).

Alternatively, alphabet shares are used in companies owned by families or in joint ventures so as to give certain shareholders power to make important decisions (for example to appoint a director).

London Law have two standard Alphabet Shares Articles, A & B shares both with voting rights and 'A' Voting and 'B' Non-Voting (Only A shareholders can cast a vote) both Articles allow different dividends to be payable on each class of share. Additional classes of shares (i.e.'C', 'D' etc) with different values can also be included.

Full with A & B Shares all voting with Different Dividend and CCV

Long Form self-contained Articles Choice of Objects Clause Two classes of Shares: "A" and "B" (different levels of dividend may be paid on the respective classes) All shares are voting shares Chairman's Casting Vote in Board Meetings Minimum number members: 1, Minimum number Directors: 1, No Members Pre-emption rights on transfer of shares

Full with A & B Shares 'A' Voting / 'B' Non-Voting with CCV

Long Form self-contained Articles Choice of Objects Clause Two classes of Shares: "A" and "B" (different levels of dividend may be paid on the respective classes) "A" Shares have votes; "B" shares are non-voting Chairmans Casting Vote in Board Metings Minimum number members: 1 Minimum number Directors: 1 No Members Pre-emption rights on transfer of shares but directors' discretion to reject transfers. As this company has more than one class of shares, any allotments of further shares (beyond the shares the subscribers have agreed to take in the formation application submitted to Companies House) require the following formality to be complied with: the allotment must be authorised by ordinary (or special) resolution of the shareholders under s. 551, Companies Act 2006.

We can also create additional classes (i.e. C, D and E) that can be either voting or non-voting depending on the set up of the company.

It is important to note here is that if your company's articles of association do not identify what rights are attached to each different class of share then they will rank pari passu with one another - meaning they all rank equally. London Law's Articles clearly identify the rights attached to each class of share.