Do you declare dividends by share class

A & B Shares

Didn't find your answer?

If a company has a A & B shares is it correct that a dividend should be declared for each individual class of share and different share classes can have a different rate of dividend?

Replies (10)

Please login or register to join the discussion.

By johngroganjga
07th Sep 2016 12:13

It will depend what the Articles say, but the usual reason for having alphabet shares is precisely to be able to vote different dividends for each class without any comeback. It would therefore be very odd for the Articles not to have been drafted to permit it.

Thanks (0)
avatar
By peterpaice
07th Sep 2016 12:45

Many thanks the articles adopted were the standard post 2013 incorporation and I cannot see anything specifically mention about dividends of different classes. The only clause that seems relevant is below.

Would the articles needs to be changed to include a clause that different share classes can be paid at different rates?

5) If the company’s share capital is divided into different classes, no interim dividend may be paid on shares carrying deferred or non-preferred rights if, at the time of payment, any preferential dividend is in arrear.

Thanks (0)
Replying to peterpaice:
By johngroganjga
07th Sep 2016 15:34

Yes the Articles will need to be amended by special resolution.

PS That is because you say that they include no provision enabling one class of shareholders to be favoured over another when it comes to dividend payments.

The provision you quote is irrelevant to the point you are asking about.

Thanks (0)
Replying to johngroganjga:
avatar
By Hugh Gemmaroyds
07th Sep 2016 14:38

That's nonsense. The article in question is just saying, essentially, that dividends cannot be paid on ordinary shares in priority to any prefernce dividend.

There's no need to change the articles for that.

I would, however, as you first stated, expect to see the rights of the different classes of ordinary shares set out in the articles. The indication though from the OP is that that is not something that has been thought about previously.

Thanks (0)
avatar
By peterpaice
07th Sep 2016 14:12

Is there any specific wording the new clause will need?

The directors are hereby given the right to declare a dividend dependant upon the relevant share class

Thanks (0)
Replying to peterpaice:
By johngroganjga
07th Sep 2016 14:24

No specific wording as such, but plainly it has to be watertight, specific and unambiguous. A job for a lawyer rather than an accountant.

I would have thought that a lawyer would say that your wording was too vague and imprecise, and that they didn't like your spelling of dependent.

Thanks (2)
Replying to johngroganjga:
By SteveHa
07th Sep 2016 16:19

johngroganjga wrote:

I would have thought that a lawyer would say that your wording was too vague and imprecise, and that they didn't like your spelling of dependent.

Like lawyers can spell. I've seen many sitting still when they wanted a pen.

Thanks (0)
avatar
By Hugh Gemmaroyds
07th Sep 2016 14:42

The company's ordinary share capital comprises both A ordinary shares and B ordinary shares as separate classes, The A ordinary shares and the B ordinary shares rank pari passu in all respects, save that different amounts of dividend may be declared for each class.

Thanks (0)
avatar
By petestar1969
12th Sep 2016 14:07

There is a Co House form you can file stating the rights attaching to each class of share, form SH10.

I believe you can also spell out on the Annual Return (now confirmation statement) what are the rights attached to each class of share.

Thanks (0)
Replying to petestar1969:
By johngroganjga
12th Sep 2016 15:55

Yes of course the rights attaching to shares are set out in both of those places. But rights are not changed by being reported there. They can only be changed by amending the Articles by special resolution.

If you reported changed rights on an annual return / confirmation statement without having taken the trouble to amend the Articles first all you would have would be an incorrectly prepared confirmation statement, unchanged rights and a bit of explaining to do to your client!

Thanks (0)