Home / Alphabet Shares: a flexible tool for growing businesses
16th October 2026
Jan Winstanley, Partner
Contributors: Holly Chadwick, Solicitor and Elen Roberts, Trainee Solicitor
Where a company has only one class of shares, these are typically referred to as “ordinary shares” and they carry no special privileges as all shareholders holding ordinary shares will have identical rights attached to their shares – the percentage entitlement to voting and economic rights is equal to the percentage of shares held, whereas alphabet shares (commonly, A, B and C shares) enable a company to create different classes of shares with rights specifically tailored to each of the share classes.
Implementing alphabet shares can allow companies to pay shareholders with different share classes dividends at different rates and/or at different times. Different classes of shares can be beneficial for attracting investors who want to ensure their investment is secure or to receive a preferential return. Companies can also reward employees by issuing shares as part of employee incentivisation schemes, with specific rights attached to such shares (e.g. non-voting) and provision for the compulsory buyback or transfer of shares in the event that the employee leaves the company.
When creating alphabet shares, to ensure that they are properly created, the rights attached to each share class must be clearly set out in the company’s articles of association, and directors must ensure any dividends declared are consistent with those rights. Dividends or capital returns in different amounts to holders of different share classes or to holders of certain classes to the exclusion of others will not be possible unless such rights are specifically and fully set out in the articles of association. This may mean that the articles require amendment along with the relevant documented board and shareholder consents to do so.
When implemented thoughtfully, alphabet shares can support succession planning, incentivise growth and accommodate changing ownership structures, helping businesses adapt without the need for complex corporate restructurings.
If your company is looking into implementing alphabet shares, Kuits corporate team are happy to assist, contact us via email at [email protected], or by telephone on 0161 832 3434.