Preference shares are a class of shares that are issued to investors in a company, that enjoy certain benefits over ordinary shares:

• Preference shares usually come with a fixed dividend payout set as the percentage of the price of the shares issued
• The shares have priority over ordinary shares in cases of dividend payout
• During situations where claims to assets are made (for example during insolvency), preference shareholders have a priority claim over ordinary shares

On the other hand, preference shares typically do not have voting rights in the company, and is a means for shareholders to entice investors with regular payouts, but still ensuring they retain control of the company.

CorporateRoom assists our clients with the proper advisory, documentation and issuance of preference shares. Some of the steps involved include:

• Ensuring of Shareholder approval under Section 161 of the Companies Act (CA)
• Updating and editing of the Company’s Constitution, pursuant to Section 75 of the CA
• Working together with legal support for the subscription agreement and shareholders’ agreement
• Preparation of required director resolutions and EGM documents