Hope you are well. I'm looking at Alphabet Share arrangements and come across a stumbling block that has caused me to question my current understanding that dividends can be issued at varying rates on different share classes.
Assume that A and B Shares are issued and rank parri passu. It is desired that Dividends are to be issued at differing rates on each Class.
My reading the Companies Act 2006 s629 suggests that the label of A and B Shares is irrelevant where equal rights exist. Does this render any sort of Alphabet Share business impossible, bearing in mind the shares are likely to have to rank parri passu in order to be effective to avoid ITEPA ERS provisions.
That being the case a Dividend's legality would be assessed by reference to a larger required amount of retained profits in the Company because all shares of identical rights would be considered of the same Class.
So my questions are:
- What defines a Class of shares for the purposes of issuing a Dividend?
- In an Alphabet Share scenario is it possible to issue differing rates of Dividend to each "Class"?
- Does a Company incorporated under CA1985 differ?