RE: Goldman Sachs30 Aug 2022 15:47
Reasons for changing class of shares
There might be various reasons for changing the class of shares, few of them are –
Opportunity to change the way of managing finances & decisions of the company.
Alteration to voting rights among employees.
Dividend & capital distribution.
By changing the class of shares, it may become possible for you to –
Bring investors to your Company’s doorstep.
Do taxation planning.
Maintain control over the company.
Enhance estate planning.
Benefit people in the form of dividend without giving control.
Issue shares to employees or family members etc.
One of the most important reasons for changing class of shares is tax planning. Declaration of different rates of dividend to different shareholders can financially benefit your company. Suppose there are shareholders who are employees and pays income tax and others one who are not into work, different dividends should be applied to each of them that can help in optimisation of personal tax allowances too.