Different classes of share capital

The following Corporate practice note provides comprehensive and up to date legal information covering:

  • Different classes of share capital
  • Meaning of 'share'
  • Nature of shares
  • Nominal value of shares
  • Transferability of shares
  • Pre-emption rights
  • Classes of shares
  • Ordinary shares
  • Preference shares
  • Convertible preference shares
  • More...

Different classes of share capital

This Practice Note considers the nature of shares in a company and the classes into which they can be divided. If a company has shares of different classes, then class rights may exist and consideration needs to be given to:

  1. whether those class rights can be, or have been, varied, and

  2. the provisions which apply to class meetings in the Companies Act 2006 (CA 2006)

For further information, see Practice Note: Class rights and variation of class rights.

Meaning of 'share'

The CA 2006 merely provides that a 'share' is a share in the company’s share capital.

References to shares in the CA 2006 also include stock, unless there is a distinction made between shares and stock. Stock is the aggregate of any number of fully paid shares, which can be held without any regard to the original nominal amount of the shares. Stock can be transferred or split up into fractions, without any regard to the shares' nominal value. The historic reason why companies used to convert shares into stock is that, prior the Companies Act 1948, there was a requirement to give each share a distinctive number, which created administrative difficulties for companies. There was no equivalent requirement for stock.

A company’s shares may no longer be converted into stock. However, stock created before 1 October 2009 may be reconverted into shares by

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