What is a Share?
A share is a portion of the company which belongs to a shareholder in exchange for his financial contribution towards the company’s share capital. A share may be fully or partially paid up.
By paying for the shares, an investor is buying partial ownership of a company. A shareholder can be an individual, a company or a limited liability partnership.
Types of Shares
A company may issue different types of shares for various reasons. Common reasons include:
- Keeping the control of the company to certain individuals.
- Offering shares with preferential dividend rights to encourage investment.
- Having different entitlements to company funds in the event the company winds up.
- Accommodating the varied needs and preferences of different investors.
Ordinary Shares – the most common type
Ordinary shares are the most common type of shares. They typically carry voting rights and will receive dividends after shareholders who own preference shares have received their dividends. Companies may divide their ordinary shares into different classes (e.g. “A” and “B”) with different rights attached to each class.
Read our guide on shares for more information about share types, transfer and allotment of shares etc.
Nominee shareholder
A shareholder is a nominee if the shareholder satisfies either or both of the following:
- Is accustomed or under an obligation (whether formal or informal) to vote, in respect of shares in the company of which the shareholder is the registered holder, in accordance with the directions, instructions or wishes of any other person;
- Receives dividends, in respect of shares in the company of which the shareholder is the registered holder, on behalf of any other person.
Frequently Asked Questions
- Question: How do I add a shareholder during incorporation of a private company limited by shares?
Answer: During incorporation, you can specify the shareholders in the incorporation application. Refer to step 10 of the Bizfile guide link here on incorporating a local company for the detailed steps. - Question: What is the difference between All in Cash, All Otherwise than in Cash, No Consideration, Partially in Cash, and Otherwise than in Cash?
Answer
• All in Cash: Shares issued with payment made entirely in cash.
• All Otherwise than in Cash: Shares issued fully by non-cash consideration, such as assets or services.
• No Consideration: Shares issued without any consideration (e.g., bonus shares).
• Partially in Cash and otherwise than in cash: Shares partly paid in cash and partly with consideration other than cash.
These terms describe the mode of payment for shares issued. For detailed legal definitions, please refer to the Companies Act or seek professional advice. - Question: What is the meaning of Issued Shares, Paid up Shares (which class of shares to choose)? Must I select one or all 3 types of shares?
- Question: Are there a minimum or maximum figures to indicate for shares?
Answer: The minimum number of issued shares is 1. The maximum figure may contain a maximum of 19 digits, with up to 19 decimal places supported to allow precise valuation. - Question: Can I have multiple currencies?
Answer: Yes, companies may issue shares in multiple currencies as per their constitution and regulatory requirements.
Answer
• Issued Shares: The number of shares that have been allotted to shareholders.
• Paid-up Shares: The portion of issued shares for which payment has been received. The amount of Paid-up shares cannot exceed the amount of issued shares.
A company may issue different types (also known as “classes”) of shares. Ordinary shares are the most common type of share. They typically carry voting rights but do not give shareholders the right to receive or demand dividends. There are also Preference Shares and Other Shares. Selection of share classes depends on your company's share structure; consult the Companies Act or seek professional advice if uncertain.
