There are four main types of company shares as defined by the Companies Act.
When forming your limited company, it is important to give a good thought about the types of company shares you are going to create and issue to your shareholders.
Your company may have as many different types of shares as you wish. Also, with different legal right and conditions attached to each type of share.
The most common share type is ordinary share. This type of share has no special rights or restrictions. Thus, your company may divide the ordinary shares into classes of different values.
Preference share carries a right that gives priority when coming to annual dividends distribution before other classes of shares.
The next one is a cumulative preference share. This type of share carries a right that if your limited company cannot pay the dividend in one year, it will carry it forward to successive years.
Last but not least is the redeemable share. This type of share is issued with agreement that it will buy them back at the option of either your company or your shareholder after a certain period or on a fixed date. However, your limited company cannot only have redeemable shares.
Once you decided the types of shares your limited company are going to issue, you are to complete your statement of capital giving details of your shares types.
At every anniversary of your company incorporation, you are to update your statement of share capital whether there are any changes, as part of your confirmation statement filing.