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Split Share Corporation

A split share corporation is a type of investment fund that separates the shares of a company into two classes: capital shares and preferred shares. Capital shareholders are entitled to capital gains, while preferred shareholders receive dividends. This structure allows investors to choose between income generation or capital appreciation based on their investment goals. Split share corporations are commonly used to provide leveraged exposure to a portfolio of stocks.

Example

An investor seeking steady income may purchase preferred shares in a split share corporation, while another investor seeking capital growth might opt for capital shares.

Key points

• Divides shares into capital (for gains) and preferred (for dividends).

• Allows investors to choose between income and capital appreciation.

• Often used for leveraged exposure to a portfolio of stocks.

Quick Answers to Curious Questions

It allows investors to tailor their investment strategy, choosing between income or capital appreciation.

Capital shares focus on capital gains, while preferred shares offer dividends and priority in payouts.

Capital shareholders bear more risk, as their returns depend on market performance, while preferred shareholders may see limited upside but enjoy more consistent dividends.