Exploring Share Classes for Your New Corporation

When forming a new corporation, one of the critical decisions you’ll need to make is determining the structure of your company’s shares. Choosing the appropriate share classes is essential for defining ownership rights, voting power, and dividend entitlements for shareholders. Let’s explore some common examples of share classes for your new corporation to help you make informed decisions.

1. Common Shares:

Common shares are the most basic type of shares typically issued by corporations. They represent ownership in the company and entitle shareholders to vote on matters such as electing the board of directors and approving significant corporate actions. Common shareholders also have the right to receive dividends, although these payments are typically discretionary and may vary depending on the company’s financial performance.

2. Preferred Shares:

Preferred shares offer certain advantages over common shares, such as priority in receiving dividends and distributions in the event of liquidation. Preferred shareholders often have fixed dividend rates, providing greater predictability in income streams compared to common shareholders. However, preferred shareholders typically do not have voting rights or have limited voting rights compared to common shareholders.

3. Class A Shares:

Class A shares are a specific category of common shares that may carry additional rights or privileges compared to other classes of common shares. These rights could include enhanced voting rights, priority in dividend payments, or preferential treatment in the event of a sale or liquidation of the company. Class A shares are often used to provide certain investors, such as founders or early investors, with special privileges or incentives.

4. Class B Shares:

Class B shares are another category of common shares that may have different rights or restrictions compared to Class A shares. These shares could be issued to employees, strategic partners, or other stakeholders and may carry specific voting rights or restrictions on transferability. Class B shares are often used to tailor ownership structures to meet the needs and preferences of different shareholder groups.

5. Non-Voting Shares:

Non-voting shares, as the name suggests, do not carry voting rights in the corporation. While non-voting shareholders do not participate in corporate governance decisions, they may still be entitled to receive dividends and distributions like other shareholders. Non-voting shares are often issued to passive investors or individuals who wish to invest in the company without actively participating in its management or decision-making processes.

Consultation with Legal Experts:

Choosing the appropriate share classes for your new corporation requires careful consideration of your business objectives, ownership structure, and shareholder preferences. Consulting with experienced legal professionals, such as those at Falcon Law PC, can provide valuable insights and guidance to help you design a share structure that aligns with your goals and protects your interests.

Contact Falcon Law PC for Personalized Legal Assistance

For personalized legal assistance and guidance on selecting share classes for your new corporation, contact Falcon Law PC at 1-877-892-7778 or via email at info@falconlawyers.ca. Our team of experienced corporate lawyers specializes in business law and can provide comprehensive support to help you navigate the complexities of corporate governance and share structuring. Don’t leave important decisions about your corporation’s share structure to chance—partner with Falcon Law PC and ensure that your business is set up for success from the start.

For inquiries or further assistance, please contact us using the information below.

Talk to us now at

Book a consultation fast and easy

Call Now ButtonCALL NOW