Shares Explanation

The team at Lindsays understands the complexities associated with creating a new company. We’ve put together a quick guide to help you understand everything you need to know about shares, to assist you in setting up a new company.

Should you have any further queries feel free to contact us by clicking here, or calling us on 0845 658 0408.

A share in a company gives its owner a stake in the company; they become one of its owners. With shares in a company, you are entitled to be involved in any key decisions regarding the company’s financial situation.
Share capital is a term given to any company that has issued shares. The amount of share capital is equal to the value of all issued shares put together. Therefore is a company has issued 2 shares to shareholders at a price of £1 per share, this would equate to a total share capital of the company being £2.
There are a number of different types of shares including ordinary shares, preference shares, cumulative shares and redeemable shares. Ordinary shares are standard and hold no special rights or restrictions. This usually means that voting rights are laid out with the principle of one share, one vote, with the same dividends entitled as all other ordinary shares.
Ordinary shareholders are most commonly the last shareholders to be paid if a company finds itself in any trouble.
Prescribed particulars cover the features of each class of share, these cover such eventualities as rights to dividends, voting rights and redeeming shares. We submit the model articles of association on your behalf, automatically, to Companies House.
If you are setting up a limited company you must do so with at least one share. The majority of UK limited companies will be registered with just one share per shareholder, unless there are complex requirements.
Again, the majority of UK limited company registrations take place with a share denomination of £1 per share. This is the share’s nominal value, counting as the amount a shareholder must pay in order to purchase a share. Most companies will begin their formation with a nominal value of a £1, a value which may differ over time.
When a company is a private or unlimited one, shares can be transferred through a private agreement between the two parties. Director’s approval may also be required in order to sanction transfer of shares between two parties. In a public company shares are transferred through brokers.

For more information, please feel free to contact our advisors who will be happy to assist you.