united-kingdom business corporate-law limited-liability-company
Starting limited company in UK - different classes of shares
<p>We are starting a limited (by shares) company with partner (in England).</p>
<p>We wanted to model it in way that I have 70% of dividend and capital distribution rights and my partner 30%, but we both have 50%/50% of voting rights.</p>
<p>We structured our stocks like this using a wizard on the Companies House website</p>
<p>Class A shares (for dividends and capital)<br />
votes: &quot;No votes per share&quot;<br />
dividend: &quot;Each share is equally entitled to a distribution of dividends&quot;<br />
capital: dividend: &quot;Each share is equally entitled to a distribution of capital&quot;
(70% of those shares assigned to me and 30% to my partner)</p>
<p>Class B shares (just for voting)<br />
votes: &quot;Each share is entitled to one vote in any circumstances&quot;<br />
dividend: &quot;No dividend distribution rights&quot;<br />
capital: dividend: &quot;No capital distribution rights&quot;<br />
(50% of those shares assigned to me and 50% to my partner)</p>
<p>We've got a rejection with reason &quot;Class B shares do not mention any dividend rights&quot; (but we covered dividend rights already by Class A shares).</p>
<p>We thought that this is whole point of different classes of shares: Class A shares give dividend and capital rights and Class B give voting rights.</p>
<p>What are we doing wrong here?</p>

<p>Typically you would have the following set up:</p>
<ul>
<li>Class A shares: these would have all the voting rights</li>
<li>Class B shares: these would have all the dividend rights</li>
<li>Class C shares: these would have all the capital rights</li>
</ul>
<p>So in this case, you would split Class A 50/50 and Classes B and C 70/30 between you and your partner. It's likely that whoever processed your application is used to this set up (Class B shares are ordinarily just dividend ones with fewer rights attached) and wrongly rejected your application.</p>
<p>Splitting the shares in such a fashion also allows you to assign more Class A shares in the future without also granting capital rights too, if that was something you wanted to do in the future.</p>
<p>Try going through the wizard with that share structure and see how you get on.</p>
