Types of Shares

The rights and duties of a member will depend on the Articles of Association of the Irish company. Certain rights accrue only to members who are shareholders in a company. A member of a company limited by shares must be a shareholder in the company. Where a company has a share capital, it is presumed that all shares have equal rights but the company may in its Memorandum or Articles of Association create a power to issue different classes of shares, including ordinary, preference and redeemable shares.

Ordinary shares

Ordinary shares generally carry the right to a vote. Where a company is wound up they generally have a right to participate in any surplus funds when all creditors have been discharged. This is beyond the fixed amount they originally invested in their shares.

Where ordinary shares carry weighted or differing levels of voting power, but carry equal entitlements in respect of dividends and capital, they are normally divided into classes - Ordinary Shares Class A, Ordinary Shares Class B etc.

Preference shares

Preference shares carry preferential rights, most commonly as a dividend or capital. A share which is preferred as to dividend usually entitles the member to be paid his dividend in priority to the ordinary shareholders.

Preference shareholders' entitlements to dividends are generally expressed as a right to a percentage per annum of the nominal amount of the share. A share which is preferred as to capital entitles the shareholder to have his capital investment in the company repaid in full before the ordinary shareholders are returned their capital in a winding up.

Redeemable shares

Redeemable shares are shares which the company is entitled to buy back from its members. Where shares are redeemed, the company generally cancels them. However, a treasury share is a share which is retained on redemption by the company and can subsequently be re-issued.

Bonus shares

Bonus shares are shares issued to the shareholders in proportion to their existing shareholdings, they are issued as having been fully paid up so the shareholders are not required to pay for them. They are usually paid from accumulated profits that have been capitalised.