Types of shares to know when starting a company
Businesses in Myanmar are now starting to set up legal companies, not just business licenses. Starting a company gives you more opportunities. Tax issues are also a source of concern. As a company, they have started to operate sole proprietorships as well as joint ventures. Whether you want to sell shares or not. Before you do anything you want to buy, you need to understand the types of shares and the rules and regulations of each one. Here are some of the share classes to choose from on the MyCo website when applying online to the Myanmar Investment and Company Administration (DICA) online.
What is Share?
Share is a unit of ownership of a company’s investment or capital. Stakeholders (shareholders) are not only entitled to claim the Company’s profits, but are also liable for the Company’s debts and losses. Shares can be shared with companies, There are different types of shareholders.
Ordinary Share (ORD) –
Ordinary Share is a very common form of share. They have the right to vote on the company’s operations and decisions. They get the right to decide based on the percentage of their share.
(1) Class A Share
(2) Class B Share
(3) Class C Share.
Class A Share (A)
Class A Share is for the CEO, Chairman, This is a share given to top officials. It has more voting rights than any other class share. Normally, Class A shares are not sold outside. And it cannot be sold between shareholders. Class A shares must be paid first, either for dividend distribution or for sale of business.
For example, a company may sell shares due to debt. If you sell the whole company, you have to pay the creditors in full first. Then it is distributed to Class A Share owners.
Class B Share (B)
Class B Share has less voting rights than Class A Share. In profit sharing, Class A is divided only after Class B. Unlike Class A, Class B shares can be transferred. It can be sold. With a Class B Share, you can convert to a Class A Share after a certain period of time. (The last one depends on the company’s constitution) –
Class C Share (C)
Class C Share is for 1 year. It is more convenient for investors who have bought for 2 years and want to resell. Class C Share has no Voting Right. Like Class B, it can be transferred and sold as its shares.
Preference Share (PRF)
Preference Share owners do not normally have the same voting rights as Ordinary Share owners. Preference Share owners often share the required profits with Ordinary Share owners. In the event of a company bankruptcy, preference shares are allocated to the shareholders from the Company’s assets. For example. : 500,000 per month I have to pay 500,000.
Redeemable Share (RED)
Redeemable Share is a type of share that allows you to redeem your own shares for cash or assets over time. The company can buy it back. Usually, you can include a time period or condition that you can redeem before you buy a share. Redeemable shares are subject to terms and conditions depending on the business situation and the customer.
Redeemable Preference Share (REDP)
Redeemable Preference Share is clear. It is a combination of Redeemable Share and Preference Share. Shareholder’s like Preference Share, monthly or annual. You get a fixed amount of money, and when the time comes, you can resell it like Redeemable Share or buy it back from the company.
Management Share (MGM) and Employee Share (EMP)
Management Share and Employee Share are the types of shares that are issued or issued to employees working over a period of time. The goal is to make loyal employees work harder / stay in the job. It is a type of share that is issued as an incentive to understand and cooperate with other shareholders’ business expectations. He is not allowed to sell outside.
Management Share is for company managers, Employee Share is a type of share issued to directors and issued to other employees. For this Management Share and Employee Share shareholder, the remaining dividends must be divided before the remaining dividends can be distributed. (Management Share and Employee Share follow the company’s constitution)
Most companies start with Ordinary Share to equalize voting rights and equity distribution at the start. The issuance of new shares is a redistribution of the above Ordinary Shares when flexible and different opportunities are required. A company can classify different share classes, and shareholders can own more than one share class. Having this property can bring benefits to different privileges (such as the right to vote or the right to profit).