Schedule 4 Company Share Option Plan (CSOP): Shares to be used: Deferred shares
Deferred shares may be ordinary share capital. An example might be a company with two classes of share, ordinary shares and deferred shares. The two classes may have identical rights except that for a period of ten years the deferred shares bear no dividends. After the ten year point the two classes merge and have the same rights to dividends as the original ordinary shares. The fact that the deferred shares have no rights to dividends during a particular period does not mean they are not ordinary share capital. Deferred shares are often created for commercial reasons, to enable private investors to take capital growth instead of dividend income.