Jun 28 2011
What is the class of share?
If you think about to open up a Limited Company you should be aware of the shares structuring. There is quite a few different types of shares however you will use one of the most common one; ordinary.
What is share capital?
When people form a company, they decide whether to limit the members’ liability by shares.
– the total number of shares of the company, – the aggregate nominal value of those shares, – and for each class of shares –
A company may have as many different types of shares as it wishes, all with different conditions attached to them. Typically, share types fall into the following categories:
– Ordinary: These are the ordinary shares of the company with no special rights or restrictions. The company may divide them into classes of different values;
– Preference: These shares carry a right that the company should pay any annual dividends available for distribution on these shares before other classes;
– Cumulative preference: These shares normally carry a right that, if the company cannot pay the dividend in one year, it will carry it forward to successive years;
– Redeemable: These shares are issued by the company with an agreement that it will buy them back at the option of either the company or the shareholder after a certain period, or on a fixed date. A company cannot have only redeemable shares.
This structuring is common for incorporation e.g. in United Kingdom & Hong Kong.