Security Class Type

Overview

Security Class Types Reference helps you understand and select the correct category of securities when setting up your organisation's capital structure.

With this reference guide, you can:

Understand each security type and its unique characteristics, rights, and legal implications
Select the appropriate type when creating a new security class based on your legal requirements
Know which types are available for your organisation structure (Company, Trust, or Cooperative)

This is particularly useful when configuring your capital structure or onboarding new securities, enabling you to choose the correct classification that matches your legal and operational requirements.

Definitions

Before you begin, here are some key terms used in this article:

Dilutive Securities

Securities that, when exercised or converted, increase the total number of shares on issue and potentially reduce existing shareholders' ownership percentage (e.g., Options, Performance Rights, Warrants).

Non-Dilutive Securities

Standard equity securities that represent existing ownership and do not create additional shares when held (e.g., Ordinary Shares, Preference Shares).

Hybrid Securities

Financial instruments that combine characteristics of both debt and equity, often with conversion features or fixed income elements.

Exercise Price

The predetermined price at which an option or warrant holder can purchase the underlying shares.

Beneficial Interest

The right to benefit from assets held in trust, even though legal title is held by the trustee.

Company Securities Reference

Equity Securities

Type	Dilution Status	Key Features	Additional Fields
Ordinary Shares (Fully Paid)	Non-Dilutive	Standard equity ownership with voting rights, dividend entitlements, capital appreciation, residual claim on assets	None
Preference Shares	Non-Dilutive	Priority dividends over ordinary shares, limited or no voting rights, may be cumulative or non-cumulative	None
Redeemable Preference Shares	Non-Dilutive	Preference shares with fixed redemption terms, company can buy back at future date or specific events	None
Partly Paid Shares	Non-Dilutive	Shares with partial payment upfront, company can "call" the remaining amount when needed	Partly Paid Amount
Contributing Shares	Non-Dilutive	Form of partly paid shares requiring future capital contributions based on calls	Partly Paid Amount

Incentive & Employee Securities

Type	Dilution Status	Key Features	Additional Fields
Options	Dilutive	Right to purchase shares at set price before expiry, commonly used in employee schemes	Exercise Price, Expiry Date
Performance Rights	Dilutive	Entitlement to receive free shares upon meeting specific KPIs, common in executive remuneration	None
Performance Shares	Dilutive	Shares issued subject to performance conditions, forfeited if conditions not met	None
Rights	Dilutive	Entitlement for existing shareholders to buy additional shares, usually at discount, tradeable	None
Warrants	Dilutive	Long-term options issued by company, give holder right to buy new shares at set price	Exercise Price, Expiry Date

Debt & Hybrid Securities

Type	Dilution Status	Key Features	Additional Fields
Convertible Notes	Dilutive	Debt paying interest that can convert to equity at specified terms, hybrid characteristics	Coupon Rate
Exchangeable Bonds	Dilutive	Debt convertible into shares of different entity (often subsidiary), pays interest until conversion	None
SAFE Notes	Dilutive	Simple Agreement for Future Equity, US startup instrument, converts during priced round	None
Hybrid Securities	Dilutive	Combined debt and equity features, includes perpetual notes and subordinated debt	None
Instalment Warrants	Dilutive	Warrants where purchase price paid in instalments, exposure to underlying performance	None

Trust Securities Reference

Type	Dilution Status	Key Features
Units	Not Applicable	Proportional beneficial interest in trust assets, share of income and capital distributions
REIT Units	Not Applicable	Real Estate Investment Trust units, must distribute majority of income to unit-holders
A-REIT Units	Not Applicable	Australian REIT units, typically listed, must distribute 90% of taxable income
Stapled Securities	Not Applicable	Two or more securities legally bound together, trade as single instrument, cannot be separated
Beneficial Interest (Fixed Trust)	Not Applicable	Fixed entitlement to trust income and capital as defined by trust deed
Beneficial Interest (Bare Trust)	Not Applicable	Complete beneficial ownership where trustee holds legal title only, commonly used for nominees

Cooperative Securities Reference

Type	Dilution Status	Key Features
Cooperative Shares	Non-Dilutive	Member ownership with democratic control, one member one vote regardless of shares held
Preference Shares (Cooperative)	Non-Dilutive	Priority dividend shares in cooperative structure, limited rights
Deferred Shares	Non-Dilutive	Non-voting shares with dividend rights deferred until other classes paid
Cooperative Capital Units (CCUs)	Non-Dilutive	Trade-able capital raising instruments, do not confer membership or voting rights
Rebate Shares	Non-Dilutive	Shares issued to members based on transaction volume with cooperative
Redeemable Shares (Cooperative)	Non-Dilutive	Shares redeemable by cooperative or member under specific rules
Community Interest Shares	Non-Dilutive	Community-focused ownership with restricted transfers and profit caps

Specialty Securities Reference

Type	Dilution Status	Key Features
MLP Units	Not Applicable	Master Limited Partnership units, publicly traded with pass-through taxation
ILP Interest	Not Applicable	Incorporated Limited Partnership ownership interest
Depositary Interests	Not Applicable	Securities representing foreign share ownership (CDIs, ADRs, GDRs) for cross-border trading
Nominee Holding	Not Applicable	Beneficial ownership structure where legal title held by nominee or custodian
Allocation Interest	Not Applicable	Temporary interest during settlement delays beyond standard T+2 period

Carbon Credits Reference

Type	Dilution Status	Key Features
Australian Carbon Credit Units (ACCUs)	Not Applicable	Trade-able credits representing 1 tonne CO2-e abated, issued under Emissions Reduction Fund
International Carbon Credits	Not Applicable	Credits from international registries (VCUs, CERs) used for voluntary or compliance offsetting

Tips and Best Practices

Selection Strategy

Match legal structure: Only select types compatible with your organisation's legal registration
Consider future needs: Choose types that align with your long-term capital structure plans
Regulatory compliance: Ensure selected types meet your jurisdiction's regulatory requirements

Dilution Classification

Verify accuracy: Ensure incentive securities are correctly marked as Dilutive for cap table calculations
Impact assessment: Understand how dilutive securities affect existing shareholder ownership percentages
Reporting implications: Dilutive securities appear in "fully diluted" calculations for valuation purposes

Field Requirements

Options and Warrants: Always require Exercise Price and Expiry Date fields
Convertible Notes: Must specify Coupon Rate for interest calculations
Partly Paid securities: Need Partly Paid Amount to track outstanding calls