Paying different dividends

Paying different dividends

 

 

 

 

 

 

 

 

 

Share classes: paying different dividends

If you want the flexibility of paying different dividends to the shareholders (eg maybe 1 person is a silent partner, or not making some contribution) you could always use different share classes.

You could then vote in favour of paying different dividends per share for each share class.

The different share classes could have the same voting rights, or these could also be different if so desired.

Example of paying different dividends

A company could have the following structure:

Ordinary A shares 30%

Ordinary B shares 40%

Ordinary C shares 30%

(Total A+B+C=100%)

The company could vote for £2 per share of Ordinary A and £1 per share for Ordinary C. So even though shareholders of A and C shares would hold 30% each of the company, A would get double the level of dividends.

Without this structure, dividends need to be paid equally in proportion to the number of shares held. This is a common mistake that companies make eg 3 directors who are also equal shareholders, but the MD gets a bigger slice of dividend cake than his/her entitlement.

 

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