When founders and investors discuss “ownership” in a Singapore company, they’re often talking about different things without realising it. With ordinary shares, the conversation is usually straightforward. But once preference shares enter the picture, the question becomes:

  • Do preference shares count as part of the company’s total share capital?

  • Are preference shares included when calculating ownership percentage?

  • Do they count for voting control and “who owns the company”?

In Singapore, the answer is: it depends on what you mean by “ownership”—legal shareholding, voting power, or economic rights.

This article breaks it down clearly, with references to the Companies Act 1967 and closely related instruments you’ll commonly rely on when structuring preference shares.

1) What are “preference shares” under Singapore practice?

“Preference shares” are simply a class of shares that carries special rights or restrictions compared to ordinary shares, typically around dividends, capital repayment, conversion, redemption, and/or voting.

The most important legal starting point is this:

Preference share rights must be written into the company’s Constitution

Under section 75(1) of the Companies Act, a company cannot allot preference shares (or convert issued shares into preference shares) unless the Constitution sets out the rights of the holders of those preference shares—covering matters such as repayment of capital, participation in surplus assets and profits, dividends (cumulative/non-cumulative), voting, and priority of payment relative to other shares.

If the company defaults, section 75(2) makes it an offence (with penalties).

Practical takeaway: In Singapore, preference shares are not “whatever you agree privately.” Their core rights must be properly documented in the Constitution, or the allotment itself is non-compliant.

2) Do preference shares form part of “total share capital” in Singapore?

In practice, yes—preference shares contribute to issued share capital

“Share capital” in Singapore is commonly discussed as the amount shareholders have committed to the company, and “paid-up capital” is what has actually been paid. ACRA summarises this in its guidance on share capital.

So when you issue preference shares for consideration (cash or otherwise), that issuance typically increases the company’s issued share capital (and paid-up capital if paid). Even if the rights differ from ordinary shares, they are still shares issued by the company.

However, when people ask “is preference share capital part of total share capital?”, they are often mixing up accounting capital with ownership/control.

So the better question is usually:

  • Are preference shares counted when computing shareholding percentage?

  • Are they counted when computing voting power/control percentage?

Those can be very different.

3) “Ownership percentage” can mean at least 3 different things

A) Ownership by legal shareholding (percentage of issued shares)

This is the simplest—and most common—way founders talk about ownership.

Typical formula:

shares held ÷ total issued shares (sometimes within the same class)

If you calculate ownership this way across all classes, then preference shares are counted in the denominator (because they are issued shares).

However, many companies and shareholder agreements don’t calculate “ownership” across all classes. Instead, they may calculate:

  • Ordinary shareholding percentage (ordinary shares only), and separately

  • Preference shareholding percentage (preference class only), and/or

  • Fully diluted percentage (assuming conversion of preference into ordinary, plus options, SAFEs, etc.)

Because preference shares frequently have conversion rights, your shareholder agreement will often specify exactly which definition is used for “ownership percentage.”

Key point: Preference shares can absolutely be counted in “ownership percentage” if the definition you’re using counts all issued shares by number.

B) Ownership by voting control (who controls decisions)

“Control” is often what the client actually cares about—who can pass resolutions, appoint/remove directors, approve major transactions, etc.

Singapore’s default voting position is set out in section 64(1) of the Companies Act:
A share confers on the holder the right to one vote on a poll at a meeting on any resolution, subject to certain carve-outs.

But preference shares commonly have limited voting rights, or are non-voting except in specific situations (for example, when dividends are in arrears, or when their class rights are being varied). That is exactly why section 75 requires the Constitution to state the voting rights (among other rights) of preference shareholders.

Also, reforms have allowed more flexibility around voting rights. ACRA’s published summary on the Companies Act reforms explains the introduction of sections 64 and 64A as part of safeguards around shares with different voting rights.

Practical takeaway:

  • If your preference shares are non-voting, they may count in “ownership by share count,” but they won’t count toward voting control.

  • If preference shares have votes (or conditional votes), they may count toward voting control to the extent set out in the Constitution.

So if your client’s question is “How much of the company do I control?”, you must analyse voting rights, not just the number of shares.

C) Ownership by economic rights (dividends + liquidation preference)

Preference shares often exist to separate economics from control.

A preference shareholder may receive:

  • a fixed or preferred dividend, and/or

  • priority return of capital on liquidation, and/or

  • participation features (or non-participation) after a preference amount is returned, and/or

  • conversion upside into ordinary shares.

These economic rights are precisely the types of rights that must be stated in the Constitution under section 75(1).

Why this matters: Two shareholders can have the same “ownership % by share count,” but very different financial outcomes depending on preference terms (e.g., 1x liquidation preference, participating preferred, cumulative dividends).

4) Preference shares are a “class” — and class rights are protected

Once you introduce preference shares, you are creating different classes of shares. Singapore law gives protections to class shareholders when rights are varied.

Variation or abrogation of class rights (section 74)

ACRA’s Companies Act Working Group materials summarise section 74(1): if the Constitution provides for varying or abrogating class rights and those rights are varied/abrogated accordingly, holders of not less than 5% of the issued shares of that class may apply to court to cancel the variation/abrogation.

Model Constitution benchmark: 75% class consent

Many Singapore companies adopt (or adapt) the Model Constitution. Under the Companies (Model Constitutions) Regulations 2015, where shares are divided into classes, class rights may be varied with:

  • consent in writing of holders of 75% of the issued shares of that class, or

  • a special resolution passed at a separate class meeting.

That same instrument also references that section 184 of the Companies Act applies (with modifications) to special resolutions at separate class meetings.

Practical takeaway: When you issue preference shares, you are not just “adding investors.” You are creating a legal structure where class rights become central—and must be handled carefully when terms change.

5) Redeemable preference shares: a common Singapore structure

If your preference shares are intended to be redeemable, the Companies Act has a specific provision you should be aware of.

Under section 70(1), a company may issue preference shares that are liable to be redeemed only if so authorised by its Constitution, and redemption must be on the terms and in the manner set out in the Constitution.

There are also constraints (e.g., fully paid before redemption, and rules if redeemed out of capital) that apply depending on structure.

Practical takeaway: If a client wants “redeemable preference shares,” you must ensure (1) the Constitution authorises them, and (2) the redemption mechanics are compliant.

6) “Ownership” for compliance: controllers and voting shares

Sometimes the reason clients ask “how are preference shares counted in ownership percentage?” is compliance-related—especially around identifying “controllers” and beneficial ownership.

ACRA’s guidance on the Register of Registrable Controllers highlights a controller test based on holding an interest in voting shares with more than 25% of total voting power (and notes certain exclusions such as treasury shares).

Why this matters for preference shares:
If preference shares are non-voting, they may not increase “total voting power,” even though they increase the total issued shares.

So for compliance questions, you must be precise about whether the test is based on:

  • total issued shares, or

  • voting shares / voting power, or

  • influence/control by other means.

7) So… are preference shares counted in ownership percentage?

Here’s the clean answer you can publish and stand behind:

  1. If “ownership percentage” means percentage of total issued shares by number:
    Preference shares are typically counted (because they are issued shares).

  2. If “ownership percentage” means voting control (percentage of votes on a poll):
    Preference shares are counted only to the extent they carry votes, which must be stated in the Constitution (Companies Act s 75(1)), and subject to the voting framework in the Companies Act (e.g., s 64(1) default).

  3. If “ownership percentage” means economic ownership (dividends/liquidation upside):
    percentagePreference shares may represent significant (or limited) economic rights depending on the terms stated in the Constitution under s 75(1).

Bottom line: Preference shares almost always count toward some form of ownership, but you must define the metric(share count vs voting power vs economics) and check the Constitution.

Frequently asked questions

“Is preference share capital part of total share capital?”

In practical Singapore usage, issued share capital generally reflects the capital committed/issued to shareholders, and preference shares issued for consideration contribute to that.

“Can we issue preference shares in Singapore without changing the Constitution?”

Usually no, because section 75(1) requires the rights of preference shares to be set out in the Constitution before allotment/conversion.

“Do preference shareholders automatically have voting rights?”

Not automatically. While section 64(1) provides a default voting rule, voting rights can be restricted or altered by class rights—so you must check the Constitution and the terms of issue (and ensure compliance with section 75(1)).

Final note (and a sensible next step)

Preference shares are powerful because they let you tailor economics and control—but they also increase legal complexity. In Singapore, the Constitution is not just paperwork: it’s the legal home for preference share rights (Companies Act s 75), and it interacts with class rights protections (Companies Act s 74) and voting rules (Companies Act s 64).

This article is general information, not legal advice. If you’re structuring a fundraise or setting up multiple share classes, get tailored advice based on your Constitution and intended term sheet.

For more information, please contact the Raffles Corporate Services customer service team at [email protected].

Yours sincerely,
The editorial team at Raffles Corporate Services