Guidance Notes: Reclassification of shares and class consents

A company may wish to convert or reclassify its shares following a sale or reorganisation and wish to grant differing share rights to the holders of the newly reclassified shares.

This Guidance Note is designed to take the reader through the processes involved in reclassifying shares from one class into another, as well as varying the class rights attached to those shares.

Use this guidance note to understand the legal and procedural steps for a share reclassification

When and how a company may want or need to reclassify its shares, for example from ordinary shares into A & B shares, and grant new rights, is a procedurally complicated area of law.

This guidance note uses a practical worked example of how and when an SME company might wish to reclassify its shares to guide the reader through the legal requirements and procedural mechanics to be considered.

What the guidance note covers

• amendments required to the company’s articles of association;
• whether the reclassification amounts to an alteration of the company’s share capital under section 617 of the Companies Act 2006;
• Companies House filings and whether a statement of capital is required following the reclassification.

Templates and company records covered by the worked example

This guidance note takes the reader through the Simply Docs template reclassification package, including board minutes, shareholder resolutions, articles of association, written class consents and Companies House forms.

It also comments on the internal company books that will require updating.

Tax and legal advice

Note that this guidance note does not consider potential tax implications and independent tax advice should be sought if necessary.

It is also strongly recommended that, as this is a complex area of law, independent legal advice more generally is considered.

Guidance Notes: Reclassification of shares and class consents is part of Corporate. Just £38.50 + VAT provides unlimited downloads from Corporate for 1 year.