Types of Shares In Singapore

Types of Shares in Singapore

Ordinary Shares

1. The most prevalent share type.
2. Generally come with voting rights.
3. Do not guarantee dividends to shareholders.
4. Can be divided into different classes (e.g., "A" and "B") with distinct rights for each class.

Preference Shares

1. Offer preferential rights superior to ordinary shares.
2. Typically include rights to fixed dividends and priority over ordinary shares for dividend distribution.
3. Holders have a priority claim on assets if the company undergoes liquidation.

Redeemable Preference Shares

1. These shares can be repaid to shareholders at an agreed value on a predetermined date or based on the directors' discretion.
2. Redemption is contingent on the company's ongoing viability.
3. Redemptions can be funded using capital from a new share issuance. A solvency statement must be filed with ACRA when redeeming these shares.

Convertible Preference Shares

1. These shares come with fixed dividend rights for a set term.
2. At the term's conclusion, the company can either convert these into ordinary shares or retain their current status.
3. Conversion prices are outlined in the company's constitution and remain static even if ordinary share prices fluctuate.

Treasury Shares

1. These are ordinary shares repurchased from shareholders.
2. The company, while listed as the owner, cannot exercise voting rights or receive dividends on these shares.
3. The total treasury shares a company can hold is limited to 10% of its total ordinary shares. Any excess must be cancelled or sold within six months.

Rights of Shareholders

Shares in your Singapore-based company grant shareholders specific advantages safeguarded by legal provisions. By understanding the influence of these benefits on your enterprise, the entrepreneur can harmonize share worth, oversee capital circulation more adeptly, and simultaneously maintain robust corporate oversight.

Notable rights of your shareholders include:

• Ensuring directors adhere to the company's constitution.
• Receiving reports and other pertinent information.
• Accessing minutes from the company's general meetings.
• Restraining actions that exceed legal authority or are illegal.
• Voting on significant corporate decisions, such as constitutional amendments.
• Receiving a share of declared dividends.
• Participating in general meetings by attending, speaking, and voting.
• Receiving annual financial statements and other company-related information.
• Being treated with fairness and equity.
• Claiming a share of proceeds if the company enters liquidation.
• Exercising rights specific to their share class.

By default, each share typically comes with one vote. However, this can vary based on the share class and the voting method. In a show-of-hands vote, every attending member (or their representative) gets one vote. In a poll, each member (or their proxy/authorized representative) gets one vote per share they hold

Comparison of Different Share Types

• Ordinary Shares: Ownership representation, usually with voting rights, no guaranteed dividends.
• Preference Shares: Preferential rights, might not have voting rights.
• Redeemable Preference Shares: Can be redeemed by the issuer, dividend rates vary but are usually higher than ordinary shares.
• Convertible Preference Shares: Can be converted into other instruments, usually with a fixed dividend rate.
• Treasury Shares: Repurchased and held by the company, no dividends or voting rights.

Conclusion

‍The type of shares a company chooses to issue depends on its goals, needs, and the preferences of its investors. Different share classes can be issued to cater to different investor needs and company objectives. It's essential for investors to understand the risks and benefits associated with each share type before making an investment decision.