Share Types and Company Membership

Key Points

ACRA describes ordinary, preference, redeemable preference, convertible preference and treasury shares. Shareholders may be individuals or entities, and shares may be fully or partly paid. Membership depends on the register and is not always identical to beneficial ownership; a guarantee company has members without share capital. Voting, dividends and information rights depend on the applicable share terms and legal framework.

Read the Share Terms Before Comparing Investor Rights

As practical preparation, compare the constitution and the terms of the relevant share class before describing an investor’s rights. ACRA lists ordinary, preference, redeemable preference, convertible preference and treasury shares, but the class label alone does not establish an identical voting or dividend entitlement in every company. Record whether the shares are fully or partly paid and distinguish ownership percentages from the specific rights attached to them.

Check registered membership separately from beneficial ownership. A nominee may appear as the registered member while another person has the beneficial interest. A company limited by guarantee has members without share capital, so a member count should not automatically be described as a shareholder count. Corporate shareholders can be companies or LLPs.

For meetings, distinguish a show of hands from a poll: the general voting descriptions are one vote per person and one vote per share respectively, subject to the applicable share rights and legal framework. ACRA also describes voting through a proxy, attorney or authorised representative. Dividends depend on profits and a decision to distribute them; they should not be presented as an automatic return. Distinguish reports, meetings and minutes-inspection rights from unrestricted access to every company record.