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What is a Company Shareholder and what do they do?

What is a Company Shareholder and what do they do

A company shareholder happens to be owner of a private company limited by shares.

A shareholder consents to become part of a company by getting at least a share issued by the business. The quantity of shares held by every shareholder represents how much of the company they own. In turn, this determines their profit right, decision-making power, as well as the limit of personal liability for business debts.

A business shareholder could be a person, a group of individuals, a joint venture, another company or any other form of organisation or body. Being the beneficial owner of a limited company, shareholders do not partake in the daily management or finances of the business. However, these duties are the responsibility of the company director(s). A shareholder can, conversely, be chosen as a director. It’s true that several individuals can establish a limited company on their own, whilst simultaneously taking up both of these roles.

The general functions of a business shareholder are:

  • Receiving a portion of available profits with regards to their shareholdings
  • Deciding which powers to give to company directors
  • The investment in a business
  • Authorising the structure of dividends
  • Contributing to company debts up to the limit of their liability
  • Putting in place the set particulars attached to shares
  • Appointing and removing directors.
  • Authorising the allotment and/or transfer of shares
  • Decision making in exceptional situations where directors have limited powers, for instance, changing the company structure, changing the name of the company, modifying the articles of association, as well as making modifications to the shareholders’ agreement.
  • Setting the salaries of directors
  • Acquiring a part of the excess capital with regards to their shareholdings in the event that a company is dissolved

Distinction between a subscriber and a shareholder
A ‘subscriber’ is the term used to represent the very first shareholder in a private limited company, who includes their names into the memorandum of association while the company is being set up. By including their names in the memorandum, the original shareholders agree to be a member of the company. Their names are included in the public register and remain on the memorandum even if they leave the company. Any person or corporate body who becomes a shareholder after incorporation will not be regarded as a subscriber; instead they will only be called a member or shareholder.

Distinction between a guarantor and a shareholder
While guarantors own companies limited by guarantee, shareholders own companies limited by shares. Both guarantors and shareholders are likewise regarded as members of a company.
Shareholders generally get a percentage of company profits with regards to the worth of their shares. Companies limited by guarantee don’t have shares and are typically set up by non-profit organisations; thus, guarantors don’t at all times receive a portion of company profits. They are liable for contributing toward company’s debts up to the worth of their shares. While guarantors on the other hand agree pay a fixed sum of money toward company’s debts in the form of a ‘guarantee’.

The difference between a director and a shareholder
These two roles are entirely different. A director is chosen to manage the daily operations and finances of a company on behalf of and for the good of its shareholders. Nonetheless, the same person can both be a director and a shareholder. While a shareholder is a beneficial owner of a company who gives financial security to the business, receives a share of company profits and holds total control of the way in which the company is managed by directors.

Is it possible for a shareholder to also be a company director?
Certainly, it is possible for a person to simultaneously be a director and shareholder in any private limited company by shares. You can own and manage a company as a director and sole shareholder; you can be one of many directors and shareholders; or even be just a shareholder and appoint someone else as a director to run the company on your behalf. Company formation legislation imposes no restriction on the number of directors and shareholders a company has, giving you the option of bringing in extra shareholders and choosing new directors at any time while your company is in existence. To qualify as a director, on the other hand, you must at least be 16 years old and you should neither be an un-discharged bankrupt nor included on the banned directors register.

What is the number of shareholders needed to list a limited company?
At least one shareholder is needed to register a private limited company by shares in the UK. However, there is no upper restriction to the shareholders’ number a company can have during or after company setup.

What company shareholder information is available to the public?
Companies House displays a great deal of corporate information on the register of companies to promote honesty and transparency to the public. The following shareholder details are registered at Companies House and added to the public register:

• Full name
• Contact address (only for subscribers)
• Type(s) of share(s) held
• The number of shares held of each class.
• The nominal value of their shares.
• The currency of each share.
• The amount due to be paid or paid on each share.

These details will be held and displayed on public record indefinitely, even if a company is dissolved.

Any shareholder joining an organisation after it has been incorporated only needs to provide their full name – no contact address is needed, nor is there any legal obligation for subscribers to notify Companies House if their contact addresses change.

Similarly, directors must ensure this information is included in the statutory register of members and held at the company’s certified office or SAIL address. This register can be examined by any member of the public thus it must be kept current at all times.

What is a corporate shareholder?
A corporate shareholder can be regarded as a non human shareholder – a group, company, partnership and organisation among others. Corporate shareholders need to choose an authorised person to function by indicating their passions, exercising their voting rights and signing any required paperwork.

 

 

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Jody Smith
Jody Smith
A content and media expert, I have worked for 7 years alongside start-ups and small businesses to effectively promote their brands through blogs, social media and content marketing strategies.

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