Non voting shares are shares whose terms remove the right to vote at general meetings and on written resolutions, while normally keeping rights to dividends and capital. Their holders are still members, so they keep the rights the Companies Act 2006 gives every member, such as receiving the accounts, inspecting the register, petitioning for unfair prejudice and consenting to any change in their class rights. They are a common way to share value with family or staff without sharing control, but the tax position depends on exactly what rights the shares carry.

What makes a share non voting?

The default is that shares vote. Section 284 gives every member one vote per share on a written resolution or a poll, but subsection (4) makes that subject to the articles. A share is non voting only because the articles or the terms of issue say so. Because section 629 treats shares as one class only if their rights are uniform in all respects, non voting shares are always a separate class from the voting shares.

The rights must be disclosed on the public record. Every statement of capital must give, for each class, particulars of any voting rights “including rights that arise only in certain circumstances” (article 2 of the Companies (Shares and Share Capital) Order 2009). Many so called non voting shares in fact gain a vote in specific cases, such as a resolution to wind up or to vary their own rights. Those conditional votes must be described.

How are non voting shares created?

There are two routes: issue new shares of a new class, or convert existing shares.

  • Articles. If the articles do not already describe the class, amend them by special resolution under section 21 and send a copy to Companies House within 15 days (section 26). Under article 22 of the model articles, a company can also issue shares with rights decided by ordinary resolution.
  • Authority to allot. Section 550 lets directors of a company with one class allot more of that class, so it does not cover a new class. The directors need authority under section 551 from the articles or a resolution.
  • Pre emption. Non voting shares that share in dividends and capital without a cap are still “ordinary shares” for section 560, so section 561 requires them to be offered to existing ordinary shareholders first unless that right is disapplied.
  • Filings. A return of allotment (SH01) with a statement of capital within one month under section 555, and notice of the class name (SH08) within one month under section 636.
  • Converting existing shares. This is a variation of rights. Where there are already classes, section 630 requires the articles’ procedure or the written consent of holders of three quarters in nominal value of the class, and section 637 requires notice of the variation (SH10) within one month. See redesignating shares.

What rights do non voting shareholders keep?

Removing votes does not remove membership. A non voting shareholder still has these statutory rights:

Right Source
Notice of general meetings, sent to every member (subject to the articles) Section 310
A copy of the annual accounts and reports Section 423
Inspection of the register of members free of charge Section 116
Petition to the court for unfair prejudice Section 994
Bringing a derivative claim for a director’s breach of duty Section 260
Consent to any variation of the class rights; holders of 15% of the class who did not consent can apply to court within 21 days Sections 630 and 633
Dividends only in accordance with the shareholders’ respective rights Model article 30(3)

Section 310(4) lets the articles override the right to notice of meetings, and many bespoke articles say non voting shares carry no right to receive notice or attend. The right to the accounts under section 423 cannot be removed in the same way. The class consent right is often the most valuable: the majority cannot simply rewrite the non voting shares’ dividend or capital rights without the class agreeing.

What can they not do?

Ordinary and special resolutions are decided by voting rights (sections 282 and 283), so non voting shares carry no weight. Only members entitled to vote are “eligible members” for a written resolution (section 289). Non voting holders also cannot count towards the thresholds that let members force action: section 303 requires members holding 5% of the paid up capital carrying voting rights to requisition a general meeting, and section 292 refers to 5% of the total voting rights to require circulation of a written resolution.

Do non voting shares count for significant control?

Yes, for the shares condition. A person is a PSC if they hold more than 25% of the shares (paragraph 2 of Schedule 1A), measured by nominal value of the issued share capital (paragraph 13). Voting rights are measured separately under paragraph 14. A spouse holding non voting shares worth 30% of the nominal capital is therefore a registrable PSC even with no votes.

How are they used in family companies, and where does tax bite?

The usual aim is to let a spouse or adult children receive dividends while the founder keeps control. Two tax points decide whether that works.

First, the settlements legislation. HMRC’s manual at TSEM4205 gives the example of B shares carrying no votes and no rights to assets on a winding up, issued to two shareholders’ wives; following Young v Pearce, the dividends are treated as the husbands’ income because the shares are wholly or substantially a right to income. In the same section, HMRC accepts that a gift of ordinary shares carrying capital rights is outside the rules (Jones v Garnett). Non voting shares that share in capital are far safer than shares that only receive dividends.

Second, Business Asset Disposal Relief. For shares not acquired under EMI, section 169S(3) of the Taxation of Chargeable Gains Act 1992 requires at least 5% of the voting rights by virtue of the holding. HMRC’s CG64050 repeats this. A family member holding only non voting shares cannot meet the personal company test, however large the holding. More on choosing between approaches is in different classes of shares and alphabet shares.

How are they used for employees?

Non voting shares suit staff who should share in growth but not in decisions. They remain ordinary share capital for tax, which section 1119 of the Corporation Tax Act 2010 defines as all issued share capital other than shares with only a right to a fixed rate dividend. That allows them to be used for Enterprise Management Incentives: paragraph 35 of Schedule 5 to the Income Tax (Earnings and Pensions) Act 2003 requires the shares to be ordinary share capital, fully paid and not redeemable, and says nothing about votes. GOV.UK confirms that shares from EMI options have their own Business Asset Disposal Relief conditions rather than the 5% personal company test. See BADR on EMI shares and giving shares to employees.

How does this look in practice?

Illustration only. Priya owns 100 ordinary £1 shares, all voting. She wants her husband to share in profits without votes.

  1. She passes a special resolution adopting articles that create non voting ordinary shares with equal rights to dividends and capital, and a resolution giving the directors section 551 authority.
  2. The company allots 30 non voting £1 shares to her husband at par, files SH01 and SH08 within a month and updates the register.
  3. He now holds 30 of 130 shares by nominal value, about 23%, so he is not a PSC. Priya still has 100% of the votes.
  4. Because his shares share in capital, the settlements risk described at TSEM4205 is much lower than for dividend only shares. He would not, though, meet the 5% voting test for Business Asset Disposal Relief.

What mistakes come up most often?

  • Labelling shares “non voting” without wording in the articles that actually removes the vote.
  • Leaving conditional voting rights off the statement of capital.
  • Assuming non voting holders need not be sent the accounts.
  • Creating shares with no capital rights for a spouse, which invites a settlements challenge.
  • Allotting the new class on section 550 authority, which only covers a single class company.
  • Expecting a non voting holder to qualify for Business Asset Disposal Relief outside EMI.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.