Shareholders and directors are two very distinct roles within a limited company. In simple terms, shareholders own the business, and directors run it. The interesting thing, however, is that the same person can be both a shareholder and a director. This means that you can set up and manage a limited company on your own because you only need one shareholder and one director to form a private limited company in the UK.<\/p>\n
On the other hand, there is no statutory limit to the number of shareholders and directors a company can have. You can register a company<\/a> with other people, and you also can bring in new shareholders and directors after company formation, for example, if you need help to run the business or require additional investment to grow the company.<\/p>\n However, companies can choose to impose limits on the number of shareholders and directors they can have. Such provisions must be stated in the articles of association or shareholder agreements (if applicable).<\/p>\n There is no requirement for directors to also be shareholders, and shareholders do not automatically have the right to be directors. However, in most private limited companies, they are the same people. This flexibility in ownership and management is one of the many great things about the limited company structure.<\/p>\n Shareholders are also known as \u2018members\u2019. The very first members (i.e., those who become shareholders during the company formation process) are called \u2018subscribers\u2019. This is because they subscribe (add) their names to the memorandum of association<\/a>, which formally records their intention to:<\/p>\n By becoming a member and taking at least one share in a limited company, a shareholder owns a piece of the business. If a company has just one shareholder, that sole person owns and controls the entire company.<\/p>\n Anyone can be a shareholder. It is also possible for non-human entities, such as limited companies, to be shareholders in other companies. They are known as corporate shareholders.<\/p>\n Shareholders invest in a company by purchasing shares<\/a>, each of which represents a certain percentage of the business. In return for owning shares, members are entitled to vote on significant decisions and receive a portion of any profit generated by the business.<\/p>\n Shareholders do not make day-to-day decisions unless they are also directors. Instead, they make decisions about exceptional matters, such as:<\/p>\n Shareholders are also liable for company debts up to the nominal value of their shares. This is called \u2018limited liability\u2019. If the company has insufficient funds to cover its debts, members are legally obligated to contribute the value of their shares toward the debt.<\/p>\n Company directors<\/a>, also known as \u2018officers\u2019, are appointed by members to run the company on their behalf and try to make it a success. Directors may or may not be shareholders.<\/p>\n The role and\u00a0responsibilities of a company director<\/span><\/a>\n \n To be a director, you must be at least 16 years old. However, you cannot be a director if you are an undischarged bankrupt, the auditor of the company, or a disqualified director of another company. It is also possible for a corporate body, such as a limited company, the be the director of another company.<\/p>\n Directors have significant responsibilities. It is their job to ensure that companies are managed effectively and successfully, in accordance with the law, and for the benefit of their members. The duties and responsibilities of company directors include:<\/p>\n Directors must dispense their duties and responsibilities in line with the ‘Directors Responsibilities’ laid out in section 171 to 177 of the Companies Act 2006<\/a>.<\/p>\nThe role of company shareholders<\/h3>\n
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What does a shareholder do?<\/h4>\n
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The role of company directors<\/h3>\n
What does a director do?<\/h4>\n
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