The Company in which I hold shares has different classes of shares, what are my rights?

The rights of a shareholder depend on the rights attaching to their shares under the company's articles of association, the Companies Act 2006 and any terms given to that class of shares by the company. In order to give different rights to different groups of shareholders, a company can have different classes of shares. There is no limit on the number of different classes of shares a company can have.  

The main rights which are usually
considered when giving share rights are:

General meetings and voting

A shareholder has a statutory
right to appoint a proxy to attend in their place and receive notice of and
attend a general meeting.

Shareholders will ordinarily have
the right to vote at a general meeting as shares usually carry one vote per
share.  This is not always the case
however as companies can issue shares that are non-voting or shares with numerous
votes. Some shares may only carry the right to vote in particular circumstances.

Share of the company's
profits

Distribution of a company’s profits
are paid by means of a dividend to its shareholders.  A dividend may be paid only if the company
has profits. 

It is a decision of the board of
directors whether to pay a dividend or not. In the absence of any provision in
relation to payment of dividends, dividends must be paid in proportion to the
shares held by each shareholder. 

It is becoming increasingly
common for a company to have different classes of shares and for its articles of
association to provide that the directors be able to vary the dividends
allocated to each class.

Final distribution on
winding up

If the company is wound up and
all creditors have been paid, the remaining assets are available for distribution
among the shareholders. This distribution is usually made in proportion to the
number of shares held by a shareholder. 
A company can however give different share classes different rights in
relation to a distribution. 

Other rights of shareholders

Shareholders also have rights to
receive certain documents form the company. 
The main documents of interest to a shareholder will be the company’s
annual report and accounts. Each shareholder has the right to receive these
when they are issued generally and upon request.

Shareholders' rights can also include
special rights, including:

• Rights relating to the appointment of directors.
• A right to be consulted or informed before the
  company takes a particular action.
• Weighted voting rights.

The rights of shareholders can be
limited, modified or waived. However, shareholders cannot be financially liable
for more than the amount unpaid on their shares.

To conclude, it would be advised
that you review the company’s articles of association to fully understand your
rights as a shareholder.

If you would like to speak to one
of our team, please get in touch with the Corporate Commercial department on
01256 320555.