Articles of Association: multiple share classes
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About this document
This document has been drawn for a company requiring different share classes.
It does not matter how many classes nor what rights attach to each. You can decide what rights will be different from one class to another based on the examples we have provided in the document.
The possibilities are endless. Some of the most common are rights:
- to receive dividends
- to appoint directors preferentially
- to prevent transfer of control of the company (sometimes called "Golden Share" rights)
- that attach to employee shares
We explain more in this article about using multiple share classes.
Having different classes is not simply a matter of setting out the rights of each. We have made many consequential important changes in other articles to provide an efficient corporate structure, set up as you will most likely require. For example, each class may require representation on the board of directors.
Editing the document is easy with the help of drafting notes that give you comments and suggestions on every paragraph.
The framework is, of course, based on the model ones provided in the Companies Act 2006. However, the model ones will not suit you as they are. There are many additions and omissions that are unworkable or impractical in the real world.
Are these articles suitable for your company?
If you need to issue shares of a different class from your basic £1 ordinary shares, you need special provisions. As you move forward you will find other provisions that require change too. You need this set of articles because the entire document has been prepared with a view to setting appropriate structure, checks and balances for a company with many shares classes.
We have therefore provided a structure to protect every shareholder - not in a way that will upset the apple cart but so that each owner knows not only his or her entitlement but how it is limited.
is suitable for incorporating a new company or for changing an existing company
provides options you may choose for different types of shares
contains modern provisions in plain English
allows you to construct your memorandum and articles to suit your exact business needs.
is full of practical and commercial help
includes draft minutes of a directors' board meeting and of a members' general meeting to change them
Other management documents
The articles are a company's legal constitution, a framework within which the company must be managed.
They can be changed - but only with the consent of at least 75% of the shareholders. The most efficient way to operate your company is to keep the articles clean of everything that may change in the medium term and keep them limited to principles of operation and a structural framework.
To deal with detail and management issues you should then have a written agreement between the shareholders. If there are conflicting interests represented among the shareholders, you should also make sure each director has a service contract. That way, there can be no misunderstand about responsibilities and power.
The way that companies are run changes over time, particularly as new directors and shareholders take over. To avoid having to change the company's articles frequently, it is sensible to draw them in ways that suit you might operate the company in the next five years, not just how you wish to do so today.
Our standard set for a limited company is a vanilla version, suitable for any company with shareholders in control through directorships, and possibly with some shareholders who are not directors.
We also have a version for a company limited by guarantee that will suit non-profits, charities and other organisations where financial gain may not be the reason for the existence of the company.
This document was written by a solicitor for Net Lawman. It complies with current English law.
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