Dividend options and multiple share classes for your employees

Have you thought about dividend options and multiple share classes for your employees or family members?

Company Formations 24.7 have received a number of enquiries on this subject and our experienced company secretarial team are ready to support you in implementing any changes required to your company documents to ensure you can pay dividends to your employees or family members before the start of the new financial year.

Multiple share classes

Most standard articles of association offer one share class to shareholders so voting rights stay the same and dividends issued are in proportion to the shares held by shareholders.

However, as a business owner you may want to pay your employees or family members dividends to reward them as your company grows and evolves. To achieve this your articles of association will need to contain the correct provisions which allow multiple share classes, with the most common form being alphabet shares.

Alphabet shares and why use them

Alphabet shares, allow you to allocate shares with different classes to employees or family members which are labelled using a specific letter e.g. “A”, “B”, “C” etc. Companies with alphabet shares can give different rights to different shareholders and pay different amounts of dividends.

For example, employees can be paid differently depending on the class of share they own while family members can be given specific shareholder powers to make important decisions within the company such as appoint a director.

It is important to note if your company’s articles of association don’t identity what rights are attached to each different class of share then the shares will be ranked equally.

How to set up alphabet shares

A company’s articles of association will need to be amended to allow alphabet shares to be implemented. This will be accomplished through a special shareholders’ resolution which will permit a change in your articles of association, which will reflect the new share class and the rights which go with that share class.

Why use our company secretarial services

Company Formations 24.7 company secretarial team can help amend and redraft your company articles of association.

With a wealth of experience spanning over 40 years and working with not only accounting firms but law firms, you can trust in our expertise and competitive pricing to provide you with the best bespoke company secretarial service on the market.

If you have any questions about paying dividends to shareholders or amending articles of association contact our qualified company secretarial team and a member of our talented team will be on hand to guarantee you have all the support you require to satisfy your needs.

Contact our secretarial team now on 0207 554 2261 or email our team here.