Readers’ forum: Share structure

I have been approached to act on behalf of a group of four interior designers who want to set up in business together – they all are trading separately at the moment. They want to form a company so that they can create a single brand and benefit from economies of scale when purchasing from suppliers and the like. They would prefer to have four classes of shares – A to D – to enable the payment of dividends of different amounts to each shareholder depending in part on the volume of business that each of them generates. The shareholders are not related.

I know that these alphabet share arrangements are very common and as long as the shareholders are fully aware of all the implications can offer significant tax advantages. But I am also aware of concerns expressed by many that such structures could...