A shareholder is the name given to an individual who owns ‘shares’ in a limited by shares company. Companies are managed by directors and owned by shareholders (also referred to as ‘members’). An individual can be both a director and a shareholder. A company can have just one shareholder or many shareholders. Each one is entitled to receive a portion of profits in relation to the number and value of their shares. Shares are issued (or allotted) to shareholders to ultimately define their liability should the company fold, and at least one share must be issued from the outset – although variations can be made later down the line. On a day-to-day basis, the number of shares also denotes the shareholders’ entitlement to dividends and votes in shareholder meetings. They normally receive a percentage of trading profits that correlates with their percentage of ownership as explained below.
Shares have both nominal value and a market value. The nominal value, which is usually £1, is the sum that a member has paid, or agreed to pay, for their portion of the company. This is the sum the member is legally required to pay toward company debts or contribute when the business is wound up. Therefore, the nominal value represents the 'limited liability' of a company's owners. The market value of a share is the amount it is worth when it is sold. This will vary from the nominal value.
Share capital is the total value of the different types of shares that have been issued to shareholders. For example, if you have decided to issue one hundred ordinary shares at a nominal value of £1 each, then the aggregate nominal value of share capital will be £100.
Shares can also be transferred or sold just like any other form of property. Filing a confirmation statement immediately or until the next confirmation statement will update the information about the transferred shares on the Companies House register.
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