How to Create Share Classes

Add Share Class test

A share class is a designation applied to a specific type of security, for example common stock. Companies that have more than one share class usually identify a given class with alphabetical markers e.g, A Shares and B Shares etc., each share class can have different rights.

The share class needs to be created before you can issue shares. Go to the Shares tab under Ownership, highlighted below, then "Classes" and click on the green “Add Share Class” button.

Share Classes Tab

Share Class detail

The “Description” field is an optional text field added for admins to give shareholders a more human explanation to understand their share class and rights e.g., "this share class was created for crowd investors who participated in our crowd round on platform XYZ".

A “Nominal Value” is the stated value of an issued share. Sometimes referred to as face value or par value. Disregards an item's market value and should not be confused with price per share.

Setting the nominal value in Capdesk will affect the computed share capital of the company (the part of the capital of a company that comes from the issue of shares). Share capital is calculated by multiplying the number of shares outstanding by the shares nominal value and is shown in the share class overview:

The “Votes” value, assigns the number of votes that each share of a particular share class holds. The number of votes assigned will be reflected in the cap table highlighted below.

The “Rights” field is not compulsory but it provides a brief and concise overview of the rights affiliated with a particular share class e.g., "Pre-emption rights on new share issuances.”

Checking the “Deferred” box will be leave out this share class from all fully diluted calculations.

The “Allow shareholders of this class access to Treehugger Limited (demo) on Capdesk” checkbox, allows you to choose whether shareholders can navigate to the company area. If left empty, they will only get a summary of their shares.

If ticked, shareholders will be able to view the cap table, news, documents and collaboration tabs. As long as a shareholder owns shares of an access granting class, they will have these privileges regardless of whether they also own shares of classes that do not grant access.

Tick the “Liquidation preference” box to give preferential rights in the case of liquidation i.e. the share class gets part of the proceeds at a liquidation before other shareholders. If you tick this, you will see more fields:

The “Seniority” field value is the liquidation rank. A higher rank means higher priority, they get proceeds before other share classes of a lower, (or no preference), rank.

Liquidation Preference Multiple” This value multiplies the investment for shareholders of this share class, (with liquidation preference) e.g., with an investment of 100 and a multiple of 2, the shareholder gets 200 before any remaining proceeds are distributed to shareholders (with lower seniority).

The “Participates after preference” checkbox is used if preferred- shareholders are to participate after the initial proceeds have been distributed. If there is no participation, shareholders will receive their liquidation preference, but nothing after that amount (i.e. they do not participate with their ownership ratio for the remaining amount. If this is ticked then you will see another checkbox:

The "Has preference participation cap” limits the participation. Ticking this box opens another field, “Participation Cap Multiple” to input how ‘long’ they participate.