What is a shareholder?

A shareholder is an individual or corporate body that owns shares (i.e., stakes; stocks) in a public or private company limited by shares. They may also be referred to as subscribers, members, stakeholders, stockholders, or company owners.

By taking one of more shares issued by a company, a shareholder becomes an equity owner of that business. They are entitled to a portion of the profits and a say in how the company is run, relative to their percentage of ownership.

Who can be a shareholder?

Almost any individual person, group of people, or corporate body (e.g., a company, organisation, partnership, etc) can be a shareholder, assuming there are no specific restrictions stated in the company's articles of association.

How many shareholders are required to set up a limited company?

To set up a private company limited by shares, only one shareholder is required. However, you can choose to set up a company with as many shareholders as you wish, and you have the option to bring in more members after incorporation. There is no limit, unless you include a specific restriction within the articles.

Public limited companies (PLCs), on the other hand, must have at least two shareholders.

What is the difference between a shareholder and a director?

Shareholders and directors have entirely different roles. A shareholder owns all or part of a company by taking at least one share, whereas a director manages a company on behalf of the shareholder(s). However, it's common for the same person to be both a shareholder and director in a company.

Whilst directors deal with everyday responsibilities and decision making, shareholders have ultimate control, making decisions on significant company matters and receiving a 'share' of any profit.

Can a shareholder also be a director?

Yes, a shareholder can also be a director of a limited company, on condition that the individual is at least 16 years old and is not prohibited under the restrictions of director disqualification, bankruptcy, a Debt Relief Order, or any provision stated in the company's articles of association.

What is a share?

A share is a unit of ownership in a company limited by shares. Each share is owned by one or more shareholders (members) and represents a percentage of the company. For example, if only one share is issued, it represents 100% ownership of the company. If two shares of equal value are issued, each one represents 50% ownership of the company.

How many shares do I need to issue to set up a company?

To set up a private company limited by shares, you only need to issue one share per shareholder. For example, if you register a company with one shareholder, you must issue at least one share; if you form a company with two shareholders, you will need to issue at least two shares.

There is no statutory restriction to the maximum number of shares you can issue during company formation or afterward, unless you include a limit within the articles.

What types of shares can my company have?

Most companies only have one type (class) of share, known as 'ordinary' shares. Typically, ordinary shares are of equal value and carry equal dividend rights and voting rights. However, other types of shares do exist, including alphabet, preference, redeemable, non-voting, and management shares.

What is the value of a share?

A share has a nominal (par) value and a market (actual) value. The nominal value is an arbitrary, static sum (usually £1 or less) assigned to a share at the time of its issue. It is the amount the shareholder agrees to pay for that share. The market value is the current market price at which a share can be traded, which fluctuates continuously due to various market factors.

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