Conversion of shares and variation of class rights

Share Reclassification & Variation of Class Rights

The process of Reclassifying shares is governed by the Companies Act 2006 as well as any additional procedural requirements contained within a company’s own articles of association. 

Reclassification of shares (also known as redesignating or renaming shares) is the process of converting issued shares from one class into another. This may be following a sale or company reorganisation or simply for administrative, historical or family reasons where shareholders choose or need to hold a different class of shares. This could be where ordinary shares are converted into one or more class of alphabet shares (A, B, etc) or in more complex arrangements, converted into certain types of preference or redeemable shares.

A reclassification of shares is also frequently accompanied by an alteration or variation of the rights of the newly re-classified shares. For example, newly created A & B shares may, going forward have different voting rights, rights to dividends or capital on a winding up. The process of altering the rights attaching to shares requires the company to obtain relevant class (shareholder) consent.

This Shares Reclassification & Variation of Class Rights subfolder therefore contains the template documents required for each stage of the process in order for a company to reclassify its share capital as well as alter the rights attaching to those shares. This includes the relevant board minutes, resolutions, class consents, new articles of association and Companies House forms as well as a useful guidance note to help navigate through this area of the law.

As this is a procedurally complicated area of the law, the documents in this subfolder are an introduction to this topic and use a particular scenario to guide the reader through the process. It is strongly recommended that whatever reclassification you are proposing, formal legal advice is considered.

Each document in this subfolder is fully compliant with the Companies Act 2006.

Reclassifying shares & variation of class rights is part of the Corporate folder. Access all Corporate documents for £35+VAT.

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