Your company’s share structure shapes how decisions are made, how profits are shared, and how ownership is managed. It is not a one-time decision. As your business grows or changes direction, your share structure may need to evolve with it.
Changing your share structure is not unusual. It can be a strategic step that supports funding, succession, or rebalancing control among shareholders. But if it is done carelessly or without proper advice, it can create confusion, legal problems, and even tax consequences.
In this blog, we explain what your share structure really means, when and why you might need to change it, and how to make those changes cleanly and correctly.
Your share structure refers to how ownership of your company is divided among its shareholders. It covers:
The total number of shares issued
The classes of shares (if more than one)
The rights attached to each share
The identity of each shareholder and how many shares they hold
The structure determines who owns how much of the business, who gets what share of profits, and who has what say in major decisions.
Most new private limited companies start with one class of ordinary shares, split equally between founders. But over time, needs change.
Not all shares are equal. You can create different classes of shares with different rights attached to them. These can include:
Ordinary shares: Typically carry equal voting rights and equal rights to dividends. Most companies start here.
Alphabet shares: Ordinary shares divided into categories such as A shares and B shares. These allow for different dividend rates or voting rights between shareholders.
Preference shares: Usually carry a fixed dividend and are paid before ordinary shares. They may have limited or no voting rights.
Non-voting shares: Allow ownership without control. Useful in employee incentive schemes or investment deals.
Redeemable shares: Issued with the agreement they will be bought back later. Often used in investor agreements.
Each class must be clearly defined in your articles of association and any shareholder agreement. The terms must be fair, legal, and properly recorded.
There are many legitimate reasons to change your company’s share structure. Common examples include:
Bringing in a new investor: If someone is investing money into the business, you may need to issue new shares or create a separate class to protect existing voting rights.
Splitting ownership between founders or family: You may want to formalise ownership for a spouse, child, or business partner without creating a 50-50 voting situation.
Creating shares for employees: Employee incentive schemes often involve non-voting or restricted shares. This allows staff to benefit from growth without diluting control.
Separating voting rights and dividend rights: Sometimes a founder steps back from the business but still wants dividend income. Alphabet shares allow flexibility in how profits are distributed.
Preparing for sale or succession: If you plan to sell the company or pass it to the next generation, changing the share structure in advance can make the process smoother and more tax efficient.
Correcting earlier mistakes: Some businesses issue shares informally or fail to register them properly. A share restructure helps fix that and brings everything back into compliance.
Changing your share structure involves both legal and administrative steps. Depending on what you are changing, the process may include:
Holding a board meeting and passing a resolution
Getting shareholder approval if required
Amending your articles of association
Issuing or reclassifying shares
Updating your share register
Filing the appropriate forms with Companies House (such as SH01 for new shares or SH08 for share reclassification)
Updating your Confirmation Statement to reflect the new structure
The changes must be properly documented. You cannot simply update your accounting software or spreadsheet. The register of members, articles, and Companies House filings must all match.
If you issue new shares, you must also consider the tax implications for recipients, especially if shares are given instead of purchased.
Changing your share structure is not complex with the right advice, but there are several common pitfalls to avoid:
Failing to get shareholder consent: If your articles require shareholder approval for new share issues or structural changes, skipping this step can render the change invalid.
Not updating Companies House: You must file the correct forms after a change. Failing to do so can delay future funding or cause confusion about who owns the company.
Ignoring the tax consequences: If shares are gifted or underpriced, HMRC may view them as income or a transfer of value. This can trigger tax for the recipient.
Overcomplicating the structure: Creating too many share classes without a clear reason can confuse shareholders, make reporting harder, and discourage future investment.
Losing track of your register: The register of members is the legal record of ownership. If it does not match your filings or internal notes, you could face legal or financial disputes.
If you are unsure whether your current structure still works for your business, ask yourself:
Has the ownership changed since the company was formed?
Are new shareholders joining or existing ones leaving?
Is there confusion over who owns how much of the business?
Do you want to create an incentive scheme for staff?
Are dividends or control rights an issue among shareholders?
Are you planning to bring in investment or sell the company?
If the answer to any of these is yes, it is worth reviewing your structure and discussing whether a change would create clarity or efficiency.
At Allied Financial Group, we help business owners get this right. Whether you are adding a new shareholder, adjusting existing rights, or creating a more tax-efficient structure, we support you every step of the way.
Our services include:
Reviewing your current share structure and company setup
Advising on practical changes based on your goals
Preparing and filing resolutions, registers, and Companies House forms
Working with your accountant or legal adviser to ensure full compliance
Updating your Confirmation Statement and other statutory filings
We make the process smooth, clear, and aligned with your company’s needs. No technical confusion. No gaps in your filings. Just a clean structure that reflects how your business actually works.
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