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\n\t\t\t<\/a>\n <\/div>\n \nTo make any such decisions, shareholders must pass a resolution, either at a general meeting or by written resolution. There are two types of company resolutions<\/a> available to members:<\/p>\n Some companies may prescribe different decision-making procedures and requirements in their articles or a shareholders\u2019 agreement, such as a higher majority or unanimous agreement for passing resolutions.<\/p>\n The rights of shareholders are set out in the Companies Act 2006, the articles of association, and any shareholders\u2019 agreement the members put in place.<\/p>\n As members of the company, shareholders are entitled to make decisions on matters beyond the scope of the directors\u2019 powers, receive copies of annual accounts<\/a>, inspect company registers, and request an audit.<\/p>\n Under the Model articles of association<\/a>, shareholders also have pre-emption rights on the allotment of new shares, but not on the transfer of existing shares.<\/p>\n What rights do shareholders of a company have?<\/span><\/a>\n Pre-emption rights – the key to maintaining your shareholdings<\/span><\/a>\n <\/p>\n Other rights are determined by the \u2018prescribed particulars\u2019 attached to their shares, as defined in the Companies (Shares and Share Capital) Order 2009<\/a>.<\/p>\n Some companies choose to vary the rights of shareholders by issuing different types of shares.<\/a> However, most private companies issue only \u2018ordinary\u2019 shares.<\/p>\n This type (\u2018class\u2019) of share provides the following rights per share:<\/p>\n The legal rights of shareholders are largely limited in the Companies Act and Model articles. Therefore, in companies with more than one shareholder, bespoke articles and\/or a well-drafted shareholders\u2019 agreement are key to bolstering the rights of all members, especially minority shareholders.<\/p>\n The notion of ownership with regard to companies is a complex one, because a company exists as a legal person in its own right.<\/p>\n Shareholders are the beneficial \u2018owners\u2019 of a company insofar as they own stock (shares) in the business. These shares entitle them to a portion of future company profits and the right to make certain decisions.<\/p>\n However, in contrast with the general concept of \u2018ownership\u2019, shareholders do not own the company’s assets. They cannot use, borrow, sell, or give away any assets of the business for personal gain, nor do they have the right to manage the company.<\/p>\n The assets of the business belong to the company itself, and the board of directors make the majority of corporate decisions on behalf of shareholders for the benefit of the company.<\/p>\n The shareholders of companies limited by shares have limited liability for the debts and actions of the business.<\/p>\n As per the Model articles of association, the liability of shareholders \u201cis limited to the amount, if any, unpaid on the shares held by them.\u201d<\/p>\n This means that, generally, their personal responsibility to contribute toward company debts is limited to the amount of money they have agreed to pay for their shares.<\/p>\n Most shares have a nominal value of \u00a31. This is the sum that the shareholder agrees to pay, either at the time of taking the shares, or at a later date upon the request of the company.<\/p>\n Are shareholders and directors liable for company debts?<\/span><\/a>\n \n Should the company become insolvent and be unable to settle its debts, the only money a shareholder risks losing is the amount they have already invested in the business, or the amount unpaid on their shares.<\/p>\n However, there are some exceptions to this rule. For example, a shareholder may be personally liable if they provide a personal guarantee for a company loan, or they engage in fraudulent or illegal activity that harms the business or its creditors.<\/p>\n Almost anyone can be a shareholder in a company with share capital, including:<\/p>\n There is no minimum age requirement, which means that even minors (persons under the age of 18) can hold shares in a company. Issuing or transferring shares to children is not unusual in small family-owned businesses.<\/p>\n Whilst the two roles are entirely different, a director can also be a shareholder in the same company. This is commonplace in many limited companies, both private and public.<\/p>\n It allows individuals to set up a company on their own as a sole director and shareholder, or form a company with one or more other people.<\/p>\n A disqualified director can be a shareholder. However, whilst company law does not prevent ownership, the individual must exercise caution to avoid breaching the terms of their disqualification order.<\/p>\n Any person who is banned from being a company director<\/a> is prohibited from being involved in the formation, marketing, or running of a company, either directly or indirectly, without the express permission of the court.<\/p>\n Such restrictions could pose serious problems if a disqualified director were to hold more than 25% of the voting rights in a company through their shareholdings. In this situation, they would be deemed a \u2018person with significant control’ (PSC), thus having the power to exert influence or control over the running of the company.<\/p>\n Moreover, if the sole director and shareholder of the company was a disqualified director, they would not be legally permitted to maintain their existing status during a period of disqualification, which can last up to 15 years.<\/p>\n Director disqualification and how it can affect you<\/span><\/a>\n \n For the company to continue, they would have to appoint a new director to run the business. They would not be permitted to directly or indirectly influence the company’s decision-making in any way, but they could work for the company as an employee and continue receiving dividends from shares.<\/p>\n However, the company would have to alter its shareholdings accordingly, to reduce the disqualified director’s voting rights to below 25%. This could be achieved by transferring at least 75% of their shareholdings to one or more other people.<\/p>\n Alternatively, the company could transfer at least 25% of the disqualified director’s shares to one or more other people and redesignate the remaining 75% as non-voting shares. This would remove the PSC element, whilst allowing the disqualified director to continue receiving most of the profits from the business.<\/p>\n Another option would be to dissolve the company and transfer the business to a sole trader structure. There are no restrictions on disqualified directors operating as sole traders.<\/p>\n A company secretary can be a shareholder in the same company. In fact, in some firms, the same person may be a director, company secretary<\/a>, and shareholder at the same time.<\/p>\n Shareholders and directors have very distinct roles in a company, even though the same person (or multiple people) can hold both positions at the same time.<\/p>\n A shareholder owns one or more shares in a company. Depending on the rights attached to their share(s), they are entitled to make decisions on exceptional matters affecting the company, exercise control over the management and direction of the business, and receive some or all of the profits.<\/p>\n \n
Shareholders\u2019 rights<\/h4>\n
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Are shareholders the owners of a company?<\/h3>\n
Are shareholders responsible for company debts?<\/h3>\n
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\n <\/a>\n <\/div>\n \nCan anyone be a shareholder?<\/h3>\n
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Can a director be a shareholder?<\/h4>\n
Can a disqualified director be a shareholder?<\/h4>\n
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\n <\/a>\n <\/div>\n \nCan a company secretary be a shareholder?<\/h4>\n
Difference between a shareholder and a director<\/h3>\n