CAN I ISSUE CLASS A and CLASS B shares with SHARE PREMIUM ?

Can I issue CLASS A and CLASS B shares with SHARE PREMIUM?

The short answer is YES! You can issue Class A and Class B shares with Share Premium!

  • Based on the Companies Law Cap 113, and the provisions of the Memorandum & Articles of Association of the Company, there is no doubt that preference shares of classes A & B can be issued as well as Share Premium on both classes.
  • Both, the M&A and the Law, provide the ability to Companies to decide about the terms and rules for the issuance of the abovementioned shares.

How to distinguish between the rights of CLASSES of SHARES A and B?

Through intercompany agreements (shareholders’ agreement) decisions such as: voting rights, amount of dividends, etc. can be established and agreed in advance.

Steps for issuing CLASS A and CLASS B shares:

    • Make sure the Memorandum and Articles of the Company allow for issuance of CLASS A and CLASS B shares.
    • Move forward with the investment by the 2 or more shareholders in the Company.
    • Proceed with the issuance of Share Premium for the already invested amount.
    • Proceed with the issuance of CLASS B shares given to the CLASS B shareholders as well as Share Premium for CLASS A and B shares proportionately as per the shareholders instructions.

 

  •  Please see below example (numbers are indicative):
    §     CLASS A§     CLASS B
    §     Ordinary shares: 1000 value €1§     Ordinary shares: 200 value €1
    §     Share premium: 100 value €2.490§     Share premium: 20 value €2.490
    §     Total Investment: €250.000§     Total Investment: €50.000

 

  • Proceed with the drafting of a shareholders’ agreement between the interested parties (SHAREHOLDER A and SHAREHOLDER B) that will determine the rights of each shareholder in relation to the class of shares held. For example, in regards to voting rights and profits/dividends rights CLASS A can have FULL voting right and CLASS B can have no voting rights whatsoever but have a specific share of profits/dividends.

Cyprus Company FAQ

Can I issue a CLASS A and CLASS B shares with SHARE PREMIUM ?

YES!

How can you distinguish the rights of Class A from Class B?

Through intercompany agreements (shareholders’ agreement) decisions such as: voting rights, amount of dividends, etc can be established and agreed in advance.

What is the corporation’s tax rate in Cyprus

The corporation tax rate in Cyprus is  12.5% standard Corporate Tax rate.

If the Company is subject to the IP Box the Corporation Tax rate is 2.5%

What does Share Premium mean?

The amount which makes the amount received by a company for a stock issue exceeds its face value.

What is a Share?

Shares are units of equity ownership in a corporation.

Contact us

Where to find us:

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P.O. BOx  42656, P.C. 6501, 6043

Larnaca – Cyprus

Tel: +357 24663402 , Fax: +357 24663409

E-mail: admin@cyprusconsultancy.com

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