Alphabet Shares: What They Are and Why They Matter

If you’re running a business, growing a team or looking at funding options, you’ve probably heard of Alphabet Shares — and if not, they’re definitely worth knowing about.

In this post, I’ll walk through what Alphabet Shares are, why businesses use them, and the practical ways they can help you stay in control while still attracting investors or rewarding employees.

Let’s get into it.

So, what exactly are Alphabet Shares?

At a glance, Alphabet Shares are just different classes of ordinary shares — typically labelled A, B, C and so on.

But the power lies in how they’re set up.

Each class can come with its own:

  • Voting rights (or none at all)
  • Dividend entitlements
  • Access to information
  • Transfer restrictions
  • Exit terms or priority payouts

This makes them incredibly flexible — which is exactly why so many founders and company directors use them.

Why do businesses use them?

Think of Alphabet Shares as a toolkit. You can design them to suit your goals — whether you’re raising money, growing a team, or preparing for an exit.

Here are some of the most common use cases:

1. Raising capital without giving up control

Let’s say you want to bring in an investor — but you’re not keen on giving them voting rights. With Alphabet Shares, you can issue them a class of shares that pays dividends, but doesn’t let them vote on key decisions.

That way, they get their return. You keep your influence – Winning

2. Avoiding hostile takeovers

In businesses where ownership is widely shared, it’s sometimes possible for someone to swoop in, buy up shares and take control. Alphabet Shares can protect against that by making sure the high-vote shares are tightly held.

3. Rewarding early team members or advisors

You might want to give shares to a founding team member, but without the ability to block decisions or slow things down. Alphabet Shares make it easy to separate financial reward from control.

4. Structuring dual-class shares

This one’s become popular in tech. A founder might hold ‘Class A’ shares with 10 votes per share, while everyone else holds ‘Class B’ shares with 1 vote each. On paper, they only own 30%, but in practice, they still steer the ship.

How Alphabet Shares work with dividends

One of the most powerful features of Alphabet Shares is how they allow you to flex your dividend strategy.

Let’s break it down:

Ordinary Shares (usually Class A)

These typically carry:

  • Equal rights to vote
  • Equal access to dividends (when declared)

Fixed Dividend Shares (often Class B or C)

These are designed to attract investors who want income. They might not get a say in business decisions, but they’re guaranteed a fixed dividend each year (assuming profits allow it).

Enhanced Dividend, Non-Voting Shares

A popular mix — give someone higher dividends in exchange for no say in the business. Great for passive investors, employee schemes or even family members.

Other share classes worth knowing about

Alphabet Shares aren’t just for external investors. They’re often used internally too:

Employee-only shares (sometimes ‘E-shares’)

These are designed to give team members a stake in the business. You can ring-fence them so that they:

  • Don’t carry voting rights
  • Can’t be sold externally
  • Receive fixed or performance-based dividends

Growth Shares

These only pay out if the business is sold or hits a major exit event. Until then, they’re worth nothing — but at the end, they can mean a big payday for those who helped build the business.

Perfect for:

  • Start-ups with limited salary budget
  • Founders wanting to keep equity protected but still incentivise long-term effort
  • Rewarding loyalty over short-term performance

Things to keep in mind

Before you dive in, there are a few essentials to get right:

1. You’ll need proper documentation

This means:

  • Shareholders’ Agreement – outlines how decisions are made, who gets what, and what happens if someone leaves
  • Articles of Association – the legal rules your company follows. It should define your share classes clearly

Handshakes and ‘good vibes’ are great — but when things go wrong (and they do), it’s what’s on paper that counts.

2. Know the regulatory boundaries

Some stock exchanges limit companies with multiple share classes from listing, so if you’re planning an IPO, this needs thinking about early.

3. Speak to someone who gets both the legal and financial side

Lots of people set up share classes that sound great in theory, but cause headaches later when trying to raise money, split profits or make changes. Work with someone who can connect the dots between law, tax, strategy and growth.

Final thoughts

Alphabet Shares aren’t just a finance gimmick — they’re a way to build a business that works for everyone involved.

You can:

  • Raise capital while keeping control
  • Protect key decision-making powers
  • Incentivise employees in smart, meaningful ways
  • Futureproof your structure for growth or exit

It all comes down to clarity, structure, and doing it properly.

If you’re thinking about share options for your business — whether you’re at start-up stage, looking at investment, or scaling fast — feel free to drop us a message. Always happy to chat things through and help you find the right fit.