- Preference shares: These carry a preferential right to a fixed rate dividend expressed as a percentage of the nominal value of the shares. Shareholders of preference shares get the same rate of dividend every year unless the profits of the company are insufficient to pay the preference share dividends.
- Cumulative preference shares: These shares provide that if a company has insufficient profits to pay a dividend on preference shares, the dividend not paid will be paid in subsequent years when the company’s profits improve.
- Ordinary shares: These rank after preference shares as regards dividends. The shareholders of ordinary shares are paid a dividend if enough money is left once preference shareholders are paid. However, unlike holders of preference shares, ordinary shareholders usually get voting rights.
- Non-voting or B shares: These are a type of ordinary share with restricted voting rights.
On registration of a company that has a share capital, a statement of capital and initial shareholdings must be submitted to the Registrar of Companies. This must include the total number of shares to be taken on incorporation by the subscribers of the memorandum, the aggregate nominal value of those shares, the rights attached to each class of share, the total number of shares in each class and the aggregate nominal value of shares in each class, the amount to be paid up by shareholders and the amount to be unpaid on each share.
Issued share capital is the total capital that has been issued and taken up by the shareholders of the company. It is expressed as the aggregate nominal value of the shares issued. A company can increase its issued share capital by issuing more shares, as long as the articles of association allow it. In addition, as stated in Parts 17 and 18 of the Companies Act 2006, a company can subdivide or consolidate its share capital, reconvert stocks into shares, redeem shares, purchase its own shares and reduce its share capital.
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