# Deferred Shares

> deferred shares of PS * each in the capital of the Company from time to time;

**Term:** Deferred Shares  
**Last updated:** 2026-07-29

## Definition

## What Deferred Shares Means in a Contract

Deferred shares are a distinct class of share capital that a company creates and describes in its constitutional documents, typically the articles of association, and references in commercial agreements such as shareholders' agreements, investment agreements, and share purchase agreements. When a contract refers to deferred shares, it is usually pointing to a specific class with a stated nominal value, for example deferred shares of £0.01 each, that carries rights ranking after ordinary shares and preference shares.

The defining feature of deferred shares is that the rights attached to them, whether to dividends, voting, or a return of capital, are postponed or heavily restricted compared to other classes. In many cases they are created specifically to have minimal economic substance, often used as a mechanism to reduce the effective rights of founders or early investors following a dilution event, a bad leaver scenario, or a restructuring.

Because the term describes a category of shares rather than a fixed set of rights, the actual entitlements attaching to deferred shares in any given company are found in the articles of association or the resolution creating the class, not in the definition itself. The contractual definition, such as the one referencing.

## Context

### Relevant circumstances

- When non-voting deferred shares are created as part of a leaver mechanism
- If unvested employee shares are converted into deferred shares on departure
- Where deferred shares have minimal economic rights but sit on the cap table

### Relevant sectors

- Finance
- Legal Services
- Business Services

## Relevant contract types

- [Service Agreement](https://www.genieai.co/en-us/template-type/service-agreement)
- [Sale Agreement](https://www.genieai.co/en-us/template-type/sale-agreement)
- [Partnership Agreement](https://www.genieai.co/en-us/template-type/partnership-agreement)

---

This is the Markdown representation of [https://www.genieai.co/en-us/define/deferred-shares](https://www.genieai.co/en-us/define/deferred-shares), provided for AI agents and crawlers. The HTML page is canonical. See [/llms.txt](https://www.genieai.co/llms.txt) for the full content map.