Mark McLaughlin warns that alphabet share structures are not as straightforward as some might think.
It is not uncommon in owner-managed businesses for a company’s shares to be divided into different classes (e.g., ‘A’, ‘B’, and ‘C’ shares) for tax planning purposes. Such shares are known colloquially as ‘alphabet shares’.
The tax objective of alphabet shares is to enable dividend payments at different rates to different shareholders in a flexible and tax-efficient manner, based on the individual shareholders’ monetary needs and tax positions.
