Non-voting Shares
/nɒn-ˈvəʊtɪŋ ʃeəz/
Non-voting shares are equity securities that give shareholders ownership rights and dividend entitlements but no voting power in company decisions.
Non-voting shares are equity securities that give shareholders ownership rights and dividend entitlements but no voting power in company decisions.
Non-voting shares represent ownership in a company without giving holders the right to vote on corporate matters.
These shares typically still entitle owners to dividends and capital appreciation, but exclude them from decision-making processes like board elections or major corporate changes.
Non-voting shares function like regular shares for financial purposes but carry no voting rights at shareholder meetings.
Holders receive dividends when declared and benefit from share price increases, but cannot influence company direction through voting.
Companies issue non-voting shares to raise capital whilst maintaining control over decision-making.
This allows founders and existing shareholders to retain voting power whilst bringing in new investors or distributing ownership to employees without diluting control.
Non-voting shares typically provide rights to dividends, capital distributions upon liquidation, and access to company information.
However, they exclude voting rights on matters like director appointments, major transactions, or changes to company articles.
Non-voting shares may convert to voting shares under specific circumstances outlined in the company's articles, such as during takeover situations, if dividends aren't paid for a certain period, or upon reaching predetermined milestones.
Non-voting shares work well for employee share schemes as they provide financial participation without complicating governance.
Employees benefit from company growth through dividends and capital appreciation whilst management retains decision-making authority.
Founders should carefully structure non-voting shares to ensure they meet both investor expectations and company governance needs.
Consider dividend policies, conversion triggers, and how these shares might affect future fundraising rounds with the relevant company registry.
