Shares & Shareholders

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 and has a say in how it is run. Shareholders are entitled to receive a share of any profits.

Who can be a shareholder?

Anyone, including another company (known as a corporate shareholder).

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?

It is a unit of ownership. The percentage of ownership depends on the number of shares issued. So, for example: if a company has 2 shares of equal value, each represents 50% ownership; 4 shares of equal value represent 25% ownership, and so on and so forth.

How many shares are required for limited company formation?

You must issue at least one share during the company formation process. There is no longer any restriction to the maximum number that can be issued.

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. It is possible to issue different types (classes) of shares, and the three most common ones are preference, cumulative and redeemable.

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.