Change Class Of Shares In Massachusetts
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Class A, Class B, and Class C shares are different categories of company stock with varying voting rights and access to dividends. Companies may use different share classes to give certain shareholders more voting power and priority on profits.
Class A, common stock: Each share confers one vote and ordinary access to dividends and assets. Class B, preferred stock: Each share confers one vote, but shareholders receive $2 in dividends for every $1 distributed to Class A shareholders. This class of stock has priority distribution for dividends and assets.
Setting aside the issue of voting rights and other differences, different classes of common stock almost always carry the same equity interest in a company. Therefore, shareholders of all classes have the same rights to share in company profits.
Class A shares typically have one vote per share and are held by regular investors. Class B shares, primarily owned by the founders, carry higher voting power with 10 votes per share. Class C shares, usually held by employees, have no voting rights.
This process is most commonly referred to as a 'redesignation', 'reclassification', or 'renaming' of shares. It involves converting issued shares from their existing class, i.e. 'type' or 'classification', to a different one.
When creating a new share class, the two documents you will need are: Board Resolution: this provides the Board minutes asking the shareholders for permission to create the new share class. Shareholders Resolution: this provides the shareholder approval.
Subject to shareholders consent, a company can create many different classes of ordinary shares. Known as alphabet shares, (A, B, C etc.)
With the written approval of its existing shareholders, company directors can create and issue a new class of shares. The new class of shares and the rights attaching to the shares will be within the company's constitution. A company must amend its constitution if directors wish to create a new class of shares.
Different Classes of Shares. After a company gains the consent of its current shareholders, it can create infinite classes of shares. These classes of shares are typically alphabetised and often contain varied rights to suit a specific company structure.
The easiest way to file a Massachusetts LLC Certificate of Amendment is online through the Secretary of the Commonwealth's Corporation Division online filing portal. You can also file by mail, in person, or by fax.
