Whether you’re launching a startup, restructuring your company, or attracting investors, understanding the nature and types of shares is essential for protecting your business interests and planning for growth.
In this post, we’ll break down what a share really is, the rights it confers, and how you can structure different classes of shares to suit your business needs.
🔍 What Is a Share?
A share represents a unit of ownership in a company. When someone holds a share, they legally own a portion of the company and may have rights to profits, decision-making, and assets if the company is liquidated.
Importantly, shares are considered movable property—this means they can be transferred, sold, or inherited, much like money or stock.
📈 What Rights Do Shareholders Have?
Unless stated otherwise in your company’s Articles of Association (your internal rulebook), each share typically gives the holder three key rights:
- 🗳 Voting Rights
Each share generally gives one vote on company decisions (e.g., electing directors or approving major changes). - 💰 Dividends
If the company earns a profit and decides to distribute it, every share gets an equal portion of the dividend. - 🏦 Share of Surplus on Liquidation
If your company is ever dissolved, shareholders have a right to an equal share of the leftover assets after debts are paid.
🧩 Can You Issue Different Types of Shares?
Absolutely! This is where it gets strategic.
Your company can issue different classes of shares, each with unique rights. Some options include:
- 🔄 Redeemable Shares
These shares can be bought back by the company later—a flexible option for investors or employee ownership plans. - 🥇 Preference Shares
These offer priority rights to dividends or liquidation proceeds but may have limited or no voting power. - 🙊 Non-Voting or Limited-Voting Shares
Perfect if you want to raise capital without giving up control. These shares allow someone to invest without influencing decisions.
This flexibility helps balance control, funding, and reward—key ingredients for long-term growth.
🧾 What About Par Value?
Modern business laws in many regions have eliminated par (or nominal) value for shares. That means shares no longer have a fixed face value like $1 or $10. This change gives companies greater flexibility in pricing and issuing shares without being bound to arbitrary values.
🔐 Are Shares Transferable?
Yes—but with a catch.
Shares are inherently transferable, meaning they can be sold or passed on. However, your Articles of Association can limit this—especially in private companies.
For example, you might:
- Require board approval before any transfer.
- Give current shareholders the first right to buy (called a “right of first refusal”).
- Restrict transfers to non-family members or outsiders.
This protects your business from unwanted shareholders and ensures ownership remains aligned with your company’s vision.
💡 Final Thoughts
Shares are more than just pieces of paper—they represent power, profits, and control.
As a business owner, understanding how to structure and manage shares empowers you to:
- Raise funds without giving up control.
- Reward employees or co-founders.
- Protect the future of your company.
When setting up or expanding your business, it’s worth getting legal or financial advice to tailor your share structure to your goals.
📬 Need help reviewing your company’s share structure?
Let’s talk—reach out to a business advisor or legal expert to ensure your share setup works for you, not against you.
