Limited company shareholders

A company limited by shares has one or more shareholders, who are also referred to as the company’s members or subscribers, each of whom own shares in the company. For small and medium sized companies, a shareholder is more often an individual but can also be a corporate entity, a group of individuals or a partnership.

Each limited company must have at least one shareholder but it is permitted to have as many as it wishes and there is no limit to the maximum number of issued shares that an individual can hold although, in the case of many smaller companies, one shareholder will hold 100% of the issued share capital.

The number of shares owned, their value and the voting rights they entail will determine how much power each shareholder has in the decision making process, their exposure to liability for any company debts as well as their entitlement to a share of the profits made by the company in the form of payment of dividends.

Although very often a director may also be the shareholder of a company, the duties and responsibilities of each role are very different. As beneficial owners of the company, shareholders do not generally get involved in the day to day running or financial affairs of the company, unlike a director for whom those are the main responsibilities.

Instead, shareholders’ responsibilities include:

•   Becoming a director themselves or appointing and removing other directors
•   Authorising the allotment or transfer of shares
•   Authorising the allocation and payment of dividends
•   Making decisions about investments in the business
•   Changing the company’s structure, name or constitution

To appoint a shareholder, the following information is required:
 

•   Full name
•   Contact address – this will be displayed on Companies House records and the share certificate
•   The class, number and value of the shares being allocated or transferred