Shareholders | Glossary | Set Up a Company

Shareholders

A Shareholder is an individual or a corporate body, such as a company or LLP, that legally owns one or more shares in the Share Capital of a Company. A Company's Shareholders collectively own that Company together. The Shareholders are also often referred to as Member of a Company. On formation of a Company the Members of the company are called Subscribers, and it is the Subscribers who sign the Memorandum of Association. Shareholders are granted special privileges depending on the type or class of Share. These rights may include:

  • The right to vote on matters such as elections to the board of directors. Usually, Shareholders have one vote per share owned, but sometimes this may not the case.
  • The right to propose Shareholder Resolutions.
  • The right to share in distributions of the Company's income.
  • The right to purchase new shares issued by the Company.
  • The right to a Company's assets during a Liquidation of the Company.

However, Shareholders' rights to a Company's assets are subordinate to the rights of the Company's creditors. Although the Directors and Officers of a company are bound by Fiduciary Duties to act in the best interest of the Shareholders, the Shareholders themselves normally do not have such duties towards each other.

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