We are often instructed by limited companies wishing to pay variable rates of dividend to their shareholders. 

The steps for achieving this are as follows:

  1. Establish different classes of share, as variable rates of dividend cannot be paid on shares of the same class. 
  2. Change the rights attaching to each class of share so that they allow for variable rates of dividend to be paid. This is usually done by amending the company's articles of association so that they clearly define the various share classes and the rights attaching to each. In particular, the articles will need to clearly specify the variable dividend rights. 

It is recommended that you have a legal expert to help you with this process as it also involves preparing corporate approvals (such as board resolutions and shareholder resolutions) and making various filings at Companies House within certain time limits.  

Please feel free to contact Guy Zarins  (g.zarins@teacherstern.com) if you require any advice on this.