Ordinary & Preference Shares Explained: Codes 3000 & 3010

When a limited company issues shares to raise capital, the type of share issued matters — ordinary and preference shares carry different rights, so Sage keeps them in separate codes.

The codes, and what each one holds

Code 3000 — Ordinary Shares records the nominal value of ordinary shares issued — the standard share class carrying voting rights and a claim to dividends, but ranking behind preference shares if the company is wound up.

Code 3010 — Preference Shares records preference shares, which typically carry a fixed dividend rate and rank ahead of ordinary shares for dividends and on winding up, but usually without voting rights. Both are Capital & Reserves codes and normally carry a credit balance, changing only when shares are issued or bought back.

Real-world examples across industries

Small bootstrapped company

At incorporation, two founders each take one £1 ordinary share in cash. The entry is a credit of £2 to 3000 (Ordinary Shares) and a debit of £2 to 1200 (Bank). Because the share count is nominal and most funding into a company like this comes via directors' loan accounts rather than share capital, 3000 typically shows a tiny, static balance — £100 or less — for the company's whole life, and 3010 (Preference Shares) never gets used at all: most small trading companies have no reason to issue anything but ordinary shares.

Company raising external investment

An investor puts £250,000 into the business for 2,500 new £1 ordinary shares. Only the £2,500 nominal value is credited to 3000; the remaining £247,500 paid above nominal value is share premium, recorded in a share premium account that doesn't appear in this default chart, so most companies add their own. The full £250,000 is debited to 1200. A separate investor in the same funding round negotiates 10,000 £1 preference shares instead, carrying a priority claim over ordinary shareholders on a wind-up plus a fixed dividend ahead of any ordinary dividend: a credit of £10,000 to 3010 and a debit of £10,000 to 1200 — a materially different security from ordinary shares, even though both raise cash for the same funding round.

Director funding a company they own

A director puts money into their own company but structures it as 5,000 £1 redeemable preference shares carrying a fixed 6% dividend, rather than a straight director's loan — sometimes chosen for tax planning reasons. The entry is a credit of £5,000 to 3010 and a debit of £5,000 to 1200. Because the shares are redeemable, the entry reverses at a set future date when the company buys them back — quite different from the company's £100 of ordinary shares in 3000, which will likely sit unchanged on the balance sheet for the company's entire life.

Why this matters day to day

Keeping ordinary and preference share capital apart matters because they carry genuinely different rights and obligations — a preference dividend is typically expected to be paid before any ordinary dividend, regardless of how the company has performed that year. For most small companies these codes barely move once shares are first issued, but they're closely checked whenever new investment comes in or ownership changes.