What is a company shareholder in the UK?
Shareholders, also referred to as ‘members,’ are the owners of companies limited by shares. A shareholder can be an individual, a group, a partnership, another company, or any other type of organization or corporate entity.
To become a shareholder, you must own at least one share in the company. The number and value of the shares you hold determine your ownership stake, decision-making influence, profit entitlement, and level of personal liability for company debts. This ownership structure gives shareholders voting rights and a claim to company profits based on the proportion of shares they own.
The role of a company shareholder
The typical responsibilities of a company shareholder include:
- Investing money in the business
- Receiving a portion of the company’s profits based on their shareholdings
- Contributing to company debts up to the limit of their liability
- Deciding which powers to grant to directors
- Authorizing the allotment and transfer of company shares
- Setting the rights (prescribed particulars) attached to shares
- Making decisions in exceptional cases where directors have limited powers, such as changing the company’s structure or name, altering the articles of association, or amending the shareholders’ agreement
- Setting directors’ salaries
- Authorizing dividend structures
- Receiving a portion of surplus capital if and when the company is dissolved
What is the difference between a company shareholder and a subscriber?
A ‘subscriber’ refers to the first members (shareholders or guarantors) of a private limited company. These individuals have their names included in the memorandum of association during the company formation process, thereby agreeing to form and become part of the company. Companies House records their names on the public register, and their names remain in Companies House Register even if they later leave the company.
Anyone who becomes a shareholder after the company has been formed is not considered a subscriber. They are simply known as a ‘shareholder,’ ‘member,’ or ‘owner.’ Regardless of whether a shareholder joins during or after incorporation, they may also qualify as a Person with Significant Control (PSC).
The difference between a company shareholder and a guarantor
Shareholders own companies limited by shares, while guarantors own companies limited by guarantee. Both are known as ‘members’ and may qualify as Persons with Significant Control (PSCs).
Shareholders contribute to company debts based on the nominal value of their unpaid shares, typically £1 per share. In contrast, guarantors commit to paying a fixed amount (a ‘guarantee’) toward company debts.
Shareholders usually receive a share of profits proportional to the number and value of their shares. On the other hand, companies limited by guarantee do not issue shares and are often formed by non-profit organizations. As a result, guarantors typically do not receive any profits. They reinvest any surplus funds into its activities or mission.
The difference between a company shareholder and a director
These two roles are distinctly different. A shareholder owns a company and provides financial stability, earning a share of the profits and holding ultimate control over the company’s direction and management by the directors.
In contrast, a company director oversees the day-to-day operations and financial management on behalf of the shareholders. However, it is common for the same individual to act as both a shareholder and a director, combining ownership with management responsibilities.
Can a shareholder also be a director?
Yes, the same person can be both a company shareholder and a director. This means you have the flexibility to:
- Own and manage a company by yourself as the sole shareholder and director.
- Own and manage a company with others, sharing ownership and directorship with one or more individuals.
- Own the business and appoint someone else as a director.
There is no legal limit to the number of shareholders and directors a company can have, allowing you to bring in business partners and appoint new directors at any stage of your company’s life.
Anyone wishing to become a director must be at least 16 years old and must not be an undischarged bankrupt or a disqualified director.
How many shareholders do I need to register a limited company?
To register a private company limited by shares in the UK, you need at least one shareholder. However, there is no statutory limit on the number of members a company can have, either during or after incorporation.
What shareholder information is available to the public?
To promote openness and transparency, Companies House records and publishes the following details of shareholders on the public register:
- Full name
- Service address (required if the shareholder is a subscriber and/or PSC)
- Type(s) of share(s) held
- Number of shares held in each class
- Nominal value and currency of their shares
- Amount paid or due to be paid on each share
If a shareholder is also a Person with Significant Control (PSC), they must provide additional information for the public register:
- Month and year of birth
- Nationality
- Country of residence
All of this information remains on public record indefinitely, even after a shareholder exits the company or if the business is dissolved.
Directors must maintain a company’s register of members and, if applicable, the PSC (Persons with Significant Control) register. They must keep these records at the company’s registered office or SAIL (Single Alternative Inspection Location) address. Since the law allows the public to inspect statutory registers, directors need to ensure these records remain accurate and up-to-date at all times.
What is a Corporate Shareholder?
A corporate shareholder is a non-human entity, such as another limited company, a partnership, or an organization, that holds shares in a company. Corporate shareholders must appoint an authorized individual to act on their behalf. This person will represent the corporate shareholder’s interests, exercise their voting rights, and sign any necessary documents.
Do you have any other questions?
So, in the UK, a company shareholder actively owns a portion of the business by holding shares. They provide capital, which not only grants them ownership but also voting rights on key company decisions. Additionally, shareholders receive dividends based on their shareholding and can influence major moves like appointing directors or approving changes. Furthermore, they can attend general meetings to stay informed and propose new ideas. By holding more shares, shareholders can gain more influence, directly shaping the company’s future.
For more details, check out the Startxpress Help Center and Blog. If you need assistance, contact us at support@startxpress.io! We’re here to help make managing your business as smooth as possible.
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