Limited Company Shareholders | 121 Company Formation

A company limited by shares has one or more shareholders (also referred to as the company’s members or subscribers). Each shareholder own shares in the company. For small and medium sized companies, shareholders are often individuals. However, a shareholder can also be a corporate entity, a group of individuals, or a partnership.

Each limited company must have a minimum of one shareholder. There is no maximum number of shareholders that the company can have. There is also no limit to the maximum number of issued shares that an individual can hold. In smaller companies, one shareholder may hold 100% of the issued share capital

The number of shares owned, their value and the voting rights they afford will determine how much power each shareholder has in the company’s decision making processes, their exposure to liability for the company’s debts, as well as their entitlement to the company’s profits in the form dividend payments.

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

Shareholders’ responsibilities include:

•  Potentially becoming a director themselves or appointing and removing other directors
•   Authorising the allocation 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