What Are Shareholders?

A shareholder is an individual or company that owns one or more shares in a company. Their name is on a share certificate issued by the company. A company may have one or many shareholders. In the US they are also called stockholders.

Most companies have the suffix LTD. This means they are limited by shares; the liability to the shareholders in the event of company bankruptcy is limited to the face-value of their shares.

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Shareholders are not personally liable for the company's debts and other financial obligations. If the company becomes bankrupt, creditors cannot demand funds from shareholders.

A share can be priced at any value when it is issued. Shareholders pay for their shares in full if the company has to shut down. This, it is wise to choose a low face-value for your share when the company is founded e.g. £1 per share.

Most companies have 'ordinary' shares. Shareholders get one vote, per share they own, on company decisions. They receive dividend payments proportionate to the number of shares they own. The percentage of the company they own is proportionate to the percentage of the total of the company shares issued.

Another name for initial shareholders is 'subscribers'. Shareholders generally can also be called or 'members' or 'owners' (of the company).

The total value of the shares is the 'share capital' e.g. 100 shares @ £1 ea. gives a share capital of £100.

Shareholders do not manage company operations, directors do. A shareholder may be a director of the company he has shares in. A director does not have to be a shareholder.


 


UK Share Certificate - Sample

Some functions of a shareholder:

- Receiving dividends from company profits proportionate to the shareholding;
- Appointing and removing directors;
- Deciding which powers to assign to directors;
- Setting the salaries of directors;
- Authorising the allotment, transfer or modification of shares;
- Modifying the company structure;
- Modifying the name of the company;
- Modifying the articles of association.

When a company is first registered, Companies House lists the following information publicly about shareholders:

- Full name;
- Contact address;
- Type(s), class(es), number, nominal value and currency of share(s) held;
- The amount due to be paid, or paid, on each share.

These details will be displayed publicly indefinitely, even if the company is closed down.

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After incorporation, shareholders only need to provide their full name; no contact address is needed.

A corporate shareholder is a non-human entity that owns part or all of a company. It can be a group, a partnership, organisation or another limited company. Corporate sharedholders must appoint an authorised person (human being) to represent their interests, exercise their voting rights and sign any required paperwork.

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