Share Classes

[MikeJ]

Purely curious on something I've seen in a small company. The company was formed with two shares, one each for a husband and wife. They've subsequently (presumably having taken advice) reissued the shares. He's got 80 class A shares, she's got 80 class B shares, and they both have 20 class C shares.

I realise they'd have different classes of shares to enable them to take different dividends, but I can't see the purpose of the C shares.

 

[NickGrogan]

Class A to pay him dividends
Class B to pay her dividends
Class C to pay them both equally

 

[MikeJ]

But they could do that through the A and B shares, surely. They'll have £x pounds to distribute, and they can sort out whatever ratio they want by declaring the correct dividend for each share.

 

[WaveJumper]

Each class probably has different voting rights as well as the already mentioned dividend allocation but there may well be limits on who gets what capital in the event of winding up

 

[UK Contractor Accountant]

The C class shares might have been set up for future transfer to children to pay for school fees etc.

 

[Porky]

Voting rights BUT also in the event of an exit and sale of the business the offer can be split by the share classes at different prices hence why they have done it. Also, I have done it in a business where I wanted the C class shares just to be used to repay a fixed amount at point of sale.
Nothing to stop them having an entire A-Z of different classes with different voting rights/ dividends and share sale arrangements.