Answer
Share classes for a first raise
What is the difference between ordinary and preference shares in a first UK raise?
GOV.UK says most companies limited by shares have one class of share, normally ordinary, and that different classes can carry different rights. HMRC's SEIS guidance says the shares must be full risk ordinary shares, not redeemable, with no special rights to the company's assets. Your solicitor and accountant confirm which applies.
Last reviewed 3 November 2026. Written by HAM Agency.
Most founders start with one kind of share and never think about it again. Then an investor asks what rights the shares carry, and the answer has to be in the articles, not in someone's memory.
What a share class is
GOV.UK says a company limited by shares can issue more than one type of share, and that most are set up with one class, which is normally ordinary. It also says different classes can carry different rights. For ordinary shares, GOV.UK says shareholders usually get one vote per share and receive dividends.
A class is defined by the rights attached to it. If the company has only ever issued one class, there's nothing to compare. If it has issued more, the rights of each should be written down in the same place.
What HMRC says about SEIS shares
If the round is under the Seed Enterprise Investment Scheme, HMRC's guidance sets conditions on the shares themselves. It says they must be full risk ordinary shares. It lists two requirements:
- the shares must not be redeemable
- they must carry no special rights to the company's assets
HMRC also says the shares can have limited preferential rights to dividends, but those rights can't be allowed to accumulate, and the dividend can't be allowed to vary. The shares must be paid up in full, in cash, when they're issued.
That's what the guidance says. Whether a particular set of shares meets it is a question for your accountant, with your solicitor reading the articles.
What to have ready
| Document | Why it matters |
|---|---|
| Articles of association | They set out the rights attached to each class |
| Register of members | It shows who holds which shares |
| Statement of capital | It records the shares in the company's filings |
HMRC's advance assurance guidance asks for an up to date copy of the memorandum and articles of association, details of any changes you expect to make, and a copy of the register of members from the date you apply. An investor's adviser will want the same documents and will read them against each other.
What to do with this
- Read your own articles and write down, in one line each, the rights of every class you've issued.
- Check the register of members agrees with the shares the cap table shows.
- Ask your solicitor and accountant about the share structure before you share the data room, not after.
The cap table side of this is part of what Raise Ready builds with you.
Questions
Do I need more than one class of share to raise money?
GOV.UK says most companies limited by shares are set up with one class, normally ordinary, and that a company can issue more than one type. Whether your round needs another class depends on the terms agreed. Your solicitor confirms that.
What does HMRC say about shares under SEIS?
HMRC's guidance says the shares you issue must be full risk ordinary shares. They must not be redeemable and must carry no special rights to the company's assets. The shares can have limited preferential rights to dividends, but those rights can't accumulate or let the dividend vary. Your accountant confirms how this applies to your round.
Will HMRC look at my articles of association?
HMRC's advance assurance guidance asks for an up to date copy of the memorandum and articles of association, and details of any changes you expect to make. It also asks for a copy of the register of members. Your solicitor can tell you what the articles say about your shares.
Does Raise Ready tell me which shares to issue?
No. Raise Ready prepares the data room, the financial model and the investor story, and checks every figure in them. It doesn't give legal, tax or investment advice, and it doesn't arrange investment. Your solicitor and accountant confirm the share structure.