hi there Nicholas Campion here with the latest instalment in the 1st Formations
video series over the next few minutes we're going to
walk you through the basics of what is a company shareholder and that'll
include their role in the company the difference
between a shareholder and other roles within the company
and what shareholder information is available to view
on the public profile now shareholders are also known as members
and they are the owners of companies limited by shares
and they can be an individual person a group of people
a partnership or another company or any other kind of organization or corporate entity
to be a shareholder a person needs to
take at least one share in the company and the number and value of the shares
will determine their total ownership in the company
which will in turn decide the decision-making power
the profit entitlement and the extent of personal liability
as the beneficial owners of a limited company shareholders aren't
involved in the day-to-day management of the business these duties are instead
the preserve of the directors although shareholders
do have the ultimate authority and they can appoint
themselves as directors this means that you can set up a limited
company on your own by taking shares and appointing yourself as a director
let's take a closer look at what the role of a company shareholder
is typically this will involve investing money in the business
receiving portions of the company's profits in relation to the shareholdings
contributing to the company's debts up to the limit of their liability
deciding which powers to grant the directors making decisions in
exceptional circumstances for example changing the name structure
or indeed altering the articles and the role also involves setting
director's salaries authorizing dividend structures and
receiving a portion of surplus capital if and when the company is wound up so
that's the usual role of the shareholder now when you go
through the formation process you may have seen reference to the
shareholders as subscribers let's take a moment just to look at what
is the difference between a shareholder and a subscriber
now essentially a subscriber is the term applied to the first members
that's either the shareholders or guarantors of a company we'll get on to
what a guarantor is in just a moment subscribers are the individuals that add
their name to the memorandum of association
during the company formation process and by doing so they agree to form the
company and become a part of it the names are
also added to the public company's house register
and it will remain there even if they leave the company at a later date
there is nothing else that separates a subscriber from a shareholder with
respect to their position in the company any person or corporate
body that becomes a shareholder after the incorporation of the company
is not a subscriber they are simply referred to as a
shareholder member or owner as a side note regardless of whether a
shareholder becomes a member during or after incorporation they may
also be a person of significant control so
that's the difference between a shareholder and a subscriber now let's
take a brief look at the difference between
a company shareholder and a guarantor now shareholders
are the owners of a company limited by shares guarantors are the owners of
companies limited by guarantee both are referred to as members and both
may also be PSCs of the company shareholders are responsible for
contributing toward the company up to the nominal value of their shares
whilst guarantors agree to pay a fixed sum of money
toward the company's debts that's their guarantee
shareholders also will usually receive a percentage of profits in relation to the
number and value of their shares companies limited
limited by guarantee do not have shares they are normally set up as non-profit
organizations which means guarantors can't usually take any of the company
profits for themselves indeed in a lot of guaranteed
companies there are actually provisions within the articles that prohibit
any of the profit being passed over to the guarantors
finally let's talk about the difference between a company shareholder and a
director now these two roles are entirely
separate and different from one another a shareholder is the beneficial owner
they provide the financial security of the business
receiving profit and having ultimate control
by contrast a company director is appointed to manage the day-to-day
operations and finances on behalf of the
company shareholders and for their benefit
now you might be asking yourself can a shareholder also be a director
and the answer is yes the same person can be a company shareholder
and director at the same time which means you can own and manage a company
by yourself by being a sole director and member
or you can own and manage your company with other individuals
by being one of two or more owners and directors
or you can own a business and appoint someone else to act as director
there is no legal limit to the number of shareholders or directors the company
can have so you have the option of bringing in
more business partners or more directors later down the line a person who wants
to be a director needs to be at least 16 years old and
they can't be an undischarged bankrupt or a disqualified director
now another question you might have is how many shareholders are required to
register a limited company now here in the uk you
need a minimum of one shareholder to register a company
there is no upper statutory limit to the number of
members a company can have during or after incorporation it's
also important to bear in mind that some shareholder information
is available on the public records these details are registered at companies
house and will include information like the
full name of the shareholder the service address if they're a
subscriber or also a PSC the types of shares held the number of shares held
within each class the nominal value and currency of those shares
and the amount paid or due to be paid on each of the shares in question
if a shareholder is also a person of significant control
they'll have to provide some additional information to go on the public record
that'll include their date of birth their nationality
and their country of residence and nature and control over the company
PSC is a topic in its own right and we'll look at it
in more detail in a later video it's important to remember that
all of these details will be held and displayed on the public record
even after shareholders depart the company directors will also need to
record this information on the company's registry of members as
well as register of PSCs if applicable these registers must be kept to the
registered office or SAIL address if they have one
statutory registers can be inspected by members of the public so they must be
kept up to date at all times
finally let's talk about corporate shareholders now a corporate shareholder
is simply a shareholder that is a non-human
entity in other words it is itself another company or partnership or
organization the role and benefits of being a
corporate shareholder are exactly the same as a natural shareholder although the
corporate shareholder must appoint an authorized person to act on its behalf
and this individual will represent the corporate
shareholders interests exercise their voting rights
and sign any required paperwork and that's it
so today we've looked at the role of the company shareholder the difference
between a shareholder and other company roles
and what information about shareholders is available to the public
if you have any questions please leave a comment we're always happy to help
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we'll see you next time cheerio