How do I Issue Alphabet Shares ?

Can a company formed with model Articles of Association issue Alphabet Shares ?

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I am working with three engineers who have recently set up a consulting business as a Limited Company. The company has 3 shares and they have 1 share each. In the short term, one of the individuals is leving his current employment and working full time in the Company - the other two will transition across and will do some ad-hoc contract work which will be charged through the company. As they wish to paid with a mix of salary and dividends, they wish to receive differening levels of dividends and for this reason the idea of alphabet shares appeals (instead of waivers etc..). 

Whilst the process of either issuing new alphabet shares or redesignating the existing shares and A,B and C shares seems relatively straightforward (albeit with a bit of paperwork at Companies House), I am getting the impression that the model articles of association that most companies are formed under will not suffice and that I will also need to submit revised articles that cater for this sort of share structure. Can anyone please advise if this is actually the case and whether there are model articles easily available that I might be able to use ?

I appreciate that we may end up having to speak with specialist lawyers but before committing to the sort of fees they might charge, I thought it worth leveraging of the experience of others to see what know-how is out there and available. 

Thanks in advance.   

Replies (12)

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By Matrix
26th Jul 2019 06:13

Yes the articles would need changing. I have done this myself in the past. You could probably get a company secretarial firm to do it rather than lawyers.

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Replying to Matrix:
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By Syd
26th Jul 2019 08:46

OK thanks for that - are you able to recommend a suitable firm (with contact details) 0 I'll check it out.

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RLI
By lionofludesch
26th Jul 2019 10:02

There are a dozen or more Company Registration Agents who can deal with this for you. Last time I did it (couple of years ago), they charged £200+VAT.

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By sparish
26th Jul 2019 10:03

we use https://www.stanleydavis.co.uk/Secretarial

They have always seemed very good but don't know how they compare on fees to other operators.

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Replying to sparish:
RLI
By lionofludesch
26th Jul 2019 10:15

If we're naming names, I use companies247.

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Replying to sparish:
Caroline
By accountantccole
26th Jul 2019 11:38

First Corporate were always helpful with my old firm. Software does it here

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By Pygmy
26th Jul 2019 16:28

Do I get the idea that there might be some correlation between the work each engineer does and the dividends they receive?

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Replying to Pygmy:
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By Syd
26th Jul 2019 16:34

At the start of the business whilst some of them are contracting but billing it through their company, there is a need for income earned that way to be remitted back to the individual contractor who earned it - eventually however, as they all work full time for the company, that shouldn't be necessary.

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Adrian Smart
By Adrian Smart
26th Jul 2019 16:35

Hi,

We (First Corporate) can help with this. We will provide:-

Minutes
Resolutions
Amended Articles
Companies House Forms

All delivered by email within 24 hours of your instruction. You simply sign and return and we do the rest.

Cost will be £172.00 + vat. Feel free to get in touch if you need any further information.

Thanks (1)
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By Matrix
26th Jul 2019 19:50

To be honest, whether you do this or use one of the above firms, the biggest expenditure should be legal fees in putting together a robust shareholder agreement. These kind of structures always go pear shaped.

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By Davemaverick
22nd Jul 2021 20:35

I had a very similar query to the above - i.e. have a client looking at Alphabet shares, conscious of the correct procedure, but wondering why articles need to be amended.

Reading the model articles (which the client adopted on incorporation), it has a section that appears to allow issuing different classes:

22. Powers to issue different classes of share
22.—(1) Subject to the articles, but without prejudice to the rights attached to any existing share, the company may issue shares with such rights or restrictions as may be determined by ordinary resolution.

So what am I missing?

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By The Dullard
23rd Jul 2021 00:31

Coming here with no knowledge and asking people that mostly lack knowledge too was a big mistake. As I think has been suggested, ask somebody that knows their [***] to deal with this.

Generally speaking though, for a company that was formed with post-CA 2006 (read post 30/9/08) model articles won't need their articles changed.

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