How to create a deferred share class in Carta
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What are deferred share classes?
Deferred share classes are a type of equity (common in the UK) that represent legal ownership of a company but offer minimal or no economic rights.
Typically, holders of deferred shares:
Are last in line for dividends, receiving payment only after specific conditions are met, such as profitability or a set minimum dividend for other share classes.
Have no or limited voting rights, restricting their influence in company decisions.
Are last to receive assets if the company is wound up, after all other shareholders and creditors.
Cannot expect to receive payouts in liquidity events (exits), as the company will often use its right to cancel deferred shares beforehand
Deferred shares "neutralize" shares for founders/employees who have not met vesting or performance conditions by converting their equity to a class with limited rights, rather than canceling the shares outright.