By
August 26, 2026
What are ordinary shares in a UK company?
Ordinary shares are the most common type of shares issued by UK private limited companies. They usually give shareholders voting rights, the opportunity to receive dividends and a share of any remaining capital if the company is wound up.
Many small UK companies issue only one class of ordinary shares because it provides a simple way to divide ownership and control.
An ordinary share represents part ownership of a company.
For example, if a company issues 100 ordinary shares and one shareholder owns 60, that person owns 60% of the issued ordinary shares.
If all the ordinary shares carry identical rights, the shareholder will usually have:
The exact rights depend on the company’s articles of association and the terms on which the shares were issued.
Ordinary shares commonly provide the following rights:
Ordinary shareholders will often have one vote for each share they own.
They may vote on matters such as:
Not every ordinary share automatically carries one vote. The company’s constitutional documents determine the actual voting rights.
Ordinary shareholders may receive dividends when the company has sufficient distributable profits and the dividend has been properly declared.
Dividends are often paid in proportion to the number of shares held.
For example, if two shareholders own 70 and 30 identical ordinary shares, they would normally receive 70% and 30% of any dividend declared on that class.
Dividends are not guaranteed. The company does not have to pay a dividend simply because it has issued ordinary shares.
Ordinary shareholders may be entitled to part of the company’s remaining assets if it is wound up.
Creditors and any shareholders with priority rights are paid first. Ordinary shareholders generally receive only what remains after those claims have been satisfied.
Yes. One person can own 100% of a UK private limited company’s ordinary shares.
The sole shareholder may also act as the company’s sole director. However, the roles remain legally separate:
The company itself remains a separate legal entity from both roles.
There is no single number suitable for every company.
A sole-owner company may issue one ordinary share worth £1. That share represents 100% ownership.
Some companies issue 100 ordinary shares because each share can represent 1% of the ownership. This makes percentage calculations and future transfers easier.
Companies expecting several founders or investors may issue 1,000 or 10,000 shares with a lower nominal value.
Every share must have a fixed nominal value. Common values include:
If a company issues 100 ordinary shares with a nominal value of £1 each, its nominal share capital is £100.
The nominal value is not the same as the share’s market value. A £1 ordinary share could become commercially worth much more if the company grows.
Ordinary shares can be fully paid, partly paid or unpaid.
If a shareholder owns a £1 share that is fully paid, no amount remains payable on that share.
If the share is unpaid, the company may call on the shareholder to pay its nominal value. Any unpaid amount may also represent the shareholder’s liability if the company is wound up.
For many small companies, issuing a modest number of fully paid ordinary shares provides a straightforward structure.
Not necessarily.
A company may have several classes of ordinary shares, such as:
These are sometimes called alphabet shares. Each class may carry different voting, dividend or capital rights.
The word “ordinary” does not guarantee that two classes have identical rights. The rights attached to each class must be checked separately.
Ordinary shares normally provide general ownership, voting and dividend rights.
Preference shares may give their holders priority over ordinary shareholders when dividends are paid or capital is returned.
Preference shares might provide:
Ordinary shareholders may receive a greater return if the company grows, but they usually rank behind preference shareholders where preferential rights apply.
Yes. A company can create a class described as non-voting ordinary shares.
These shares may provide dividend and capital rights without the usual right to vote on company decisions.
Non-voting ordinary shares may be used for:
The rights must be clearly stated in the company’s articles and statement of capital.
Shareholders holding shares within the same class will normally have the same dividend rights.
If a company wants flexibility to pay different dividends to different groups, it may create separate share classes. For example, it could issue A ordinary and B ordinary shares with different dividend rights.
The articles and class rights must support the arrangement. The company must also have sufficient distributable profits and follow the correct dividend procedure.
Professional advice should be obtained before creating alphabet shares or paying different dividends to related shareholders.
Yes. A shareholder may be able to sell, give or otherwise transfer ordinary shares to another person.
Before transferring shares, the company should check:
The company must update its register of members and issue a new share certificate where appropriate.
A private share transfer is not normally reported immediately through a separate Companies House transfer form, but updated shareholder information is generally reflected in the company’s confirmation statement.
Yes. A company may issue additional ordinary shares after incorporation.
The company must consider:
New shares can dilute existing shareholders.
For example, a shareholder owns all 100 existing ordinary shares. If the company issues another 100 identical shares to an investor, the original shareholder’s ownership falls from 100% to 50%.
No. Shareholders own shares in the company, but the company owns its assets.
An ordinary shareholder does not personally own part of the company’s bank balance, property or equipment. The company is a separate legal person.
The shareholder’s economic rights come from their shares, including possible dividends and capital distributions.
A shareholder’s liability is normally limited to any amount unpaid on their shares.
If a shareholder owns 100 fully paid ordinary shares with a nominal value of £1 each, there is normally no further amount payable on those shares.
Limited liability may not protect a shareholder from separate personal obligations, such as personal guarantees or liability arising from unlawful conduct.
A company’s statement of capital includes information about its shares, such as:
The description of share rights should explain voting, dividend, capital and redemption rights.
Ordinary shares can provide:
Possible disadvantages include:
Ordinary shares represent ownership in the company. A shareholder’s percentage is normally calculated by comparing their shares with the total number of issued shares carrying the same rights.
No. One vote per share is common, but the company’s articles and class rights determine the actual voting entitlement.
No. Dividends can be paid only when the company has sufficient distributable profits and follows the correct procedure.
Yes. Many UK private limited companies operate with one class of ordinary shares.
Yes. A director can also be a shareholder and may own some or all of the company’s ordinary shares.
Yes. A non-UK resident can own ordinary shares in a UK limited company, subject to applicable legal, tax and regulatory requirements.
Ordinary shares are the most common shares issued by UK limited companies. They usually provide voting rights, dividend rights and an entitlement to remaining capital if the company closes.
A simple company may issue one class of ordinary shares with equal rights. Companies with investors, employees or different ownership arrangements may need separate classes.
The rights attached to ordinary shares should always be checked in the company’s articles of association and statement of capital.
This article provides general information and does not constitute legal, tax or financial advice.
