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Accounting and Corporate Regulatory Authority

Understanding share types & shareholding

Explains the five different types of shares and key concepts related to shareholding.

Last updated 29 January 2026

What are shares

Shares represent ownership in a company. When someone buys shares, they become a shareholder and own a part of the business. The money they pay becomes part of the company's share capital. A share may be fully or partially paid up.

Five types of shares

Companies can allot five different types of shares. Each share type has its own rights and features:

  1. Ordinary shares (most common type)

  2. Preference shares

  3. Redeemable preference shares

  4. Convertible preference shares

  5. Treasury shares

Understanding shareholding

Shareholders own shares in a company. Your company can have individual shareholders and corporate shareholders. Corporate shareholders are business entities that own shares in another company, such as:

  • Other limited companies

  • Limited liability partnerships (LLPs)

  • Non-profit organisations and charities

Benefits of having corporate shareholders

Corporate shareholders can be valuable for new companies:

  • Brand value: An established business partner helps build credibility

  • Business expertise: Access to knowledge and experience from the investor

  • Better terms: Easier to access favourable rates with suppliers and manufacturers

  • Financial stability: Backing from an established entity strengthens your position

Shareholders vs members

Shareholders and members are two different concepts that do not always overlap.

Definitions and key features

Role

What you need to know

Member: A person whose name appears in your Electronic Register of Members.

  • Every company must have at least one member.

  • Being a member does not always mean you own shares. For example, in companies limited by guarantee, members exist but there are no shareholders (there is no share capital).

Shareholder: A person who owns shares in the company.

  • Most shareholders are members of a company too.

  • However, owning shares does not automatically make you a member. For example, a beneficial owner may be a shareholder while their nominee is the registered member.

Shareholder rights

Shareholders are only liable for the amount they have invested. This means you are only responsible for the amount you paid for your shares.

Depending on the type of shares you own, you may also enjoy these rights:

Rights

Shareholder right

Details

Dividends & returns


You may:

  • Receive dividends when the company makes profits and decides to share them

  • Get your share of proceeds if the company closes down and sells its assets

Voting and decision-making


You may vote on major company decisions, like changing the company constitution.

Your voting rights depend on two things: Your share type and the voting method.

Voting methods:

  • Show of hands: One person gets one vote, no matter how many shares they own.

  • Poll vote: One share gets one vote (default rule).

Ways to vote:

  • In person at the meeting

  • Through a proxy (someone you authorise to vote for you)

  • Through an attorney or other authorised representative

Information & transparency


You may:

  • Receive reports and other information, such as annual reports and financial statements

  • Attend and speak at general meetings

  • Inspect meeting minutes from general meetings

Protection


You may:

  • Stop illegal actions by the company or actions that go beyond what the company is legally allowed to do

  • Ensure directors follow the company's constitution

  • Be treated fairly by the company

  • Enjoy the specific rights that come with your type of shares


The above guide is intended to provide broad guidance. As it avoids legal language wherever possible, it might contain some generalisations about the applications of the legislation. Professional advice should be sought on how the relevant laws may apply to your specific case or circumstances.