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Alphabet shares describes the different classes of shares in a limited company. By labelling them as A or B shares and so on, they’re easier to identify.

Why are different alphabet share classes useful?

When a company issues different types of shares, it can assign different rights to each type. This means the company can control what shareholders are entitled to, such as dividend payments or voting rights.

For example, a company issues three types of shares: A, B, and C shares.

Read our article about dividend tax rates and thresholds.

How do I create different types of alphabet shares?

Directors of a limited company create a new class of shares by agreeing to adopt them into the company’s articles of association.

This process starts with a directors’ meeting to agree the different share classifications, and how to apportion them. The next stage is to notify the shareholders, and ask for their approval.

You’ll need to amend the company’s articles of association – these are the written rules setting out how to run the company.

You must notify Companies House within 15 days, and complete an SH01 (Return of an Allotment of Shares) form .

accounting services for limited companies

Get professional advice on all shareholder agreements

As setting up shareholder agreements can be a delicate process, it’s worth asking for professional help from an accountant or solicitor.

They’ll help you create a formal record of any agreements, and complete the relevant paperwork correctly.

If you would like to speak with an accountant about shareholder agreements or dividends, get in touch with The Accountancy Partnership for an instant quote, or call 020 3355 4047.

About The Author

Christopher Jones

Forensics graduate-turned copywriter and blogger. I love turning complex topics into easy to understand, yet engaging pieces of content.

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