Structuring International Business Companies in Nevis with Class A and Class B Shares
The Nevis International Business Corporation Ordinance (the "NIBCO") governs the incorporation and operation of International Business Companies ("IBCs") in Nevis. The legislation permits companies to issue shares with different rights, privileges, restrictions, and conditions, as determined in their articles of incorporation, commonly designated as Class A and Class B shares.
An IBC with Class A and Class B shares may be structured for various objectives, such as wealth management, corporate governance, and asset protection. Class A shares may carry voting rights, and receive dividends, while Class B shares primarily hold economic entitlements without voting rights.
For succession planning, Class B shares may be issued to family members, trusts, or foundations to receive dividends, while Class A shares remain with family members responsible for decision-making. For investment structuring, different classes can be used to separate capital contributions from profit participation.
The rights and obligations of Class A and Class B shares are not predetermined by the NIBCO but must be expressly defined in the corporate documents. Some examples of how Class A and Class B may be defined are as follows:
- Voting Rights: Class A shares may carry exclusive voting powers, while Class B shares may have limited or no voting rights.
- Dividend Rights: One class may be entitled to preferential dividends, while the other may have limited participation in dividends.
- Redemption: The IBC may provide that Class B shares are redeemable or convertible into Class A shares under specified conditions.
- Participation Rights: One class may have rights to receive financial statements, attend meetings, or exercise pre-emptive rights, while the other may be excluded.
To properly establish and govern Class A and Class B shares, the IBC must define the classes of shares in its articles of incorporation and bylaws. Additionally, the shareholders may execute a shareholder agreement to set out their rights, voting procedures, dividend policies, transfer restrictions, and other relevant conditions.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
