Shares & Shareholders

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'A businesswoman smiles at a conference table filled with colleagues in a white office space.

What is a shareholder?

A person or corporate body that owns shares in a limited company. If there is more than one shareholder, each shareholder owns a piece of the company. They are usually entitled to receive some of the profits of the company and to have a say in how it is run, in proportion to their holding.

Who can be a shareholder?

Almost anyone can be a shareholder, including another company (known as a corporate shareholder). Note, however, that a company's articles may prohibit some from holding shares in the company (such as minors).

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

You will need to have at least one to set up a limited company.

What is the difference between a shareholder and a director?

Shareholders own the company and tend only to involve themselves in major decisions that occur infrequently. Directors manage and run the business, dealing with everyday responsibilities and decision-making.

Can a shareholder also be a director?

Absolutely. As long as the individual is at least 16 years old and is not an undischarged bankrupt or a disqualified director.

What is a share?

A share is a unit of ownership in the company. The percentage of ownership depends on the number and value of shares allotted to a person. For example, if a company has 2 shares of equal value, each share therefore represents 50% ownership in the company.

How many shares are required for limited company formation?

You must issue at least one share during the company formation process. There is no statutory restriction to the maximum number that can be issued, although sometimes a company's articles may place in a limit.

What type of shares can I have?

Most companies keep things simple and have ordinary shares that carry equal value and voting rights for each shareholder. Other share types do exist, however, and might include alphabet shares, preference shares, or redeemable shares.

What is the value of a share?

It has a nominal value and an actual (market) value. The nominal value is the amount a shareholder pays for it, or has to pay if the company is being wound up. The actual value may vary from this amount. Typically, a share will have a nominal value of £1.00.

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