Shares and shareholders

Shareholders are investors in the company.

They pay money into the company in return for shares.  The number of shares they hold determines the level of control they have, at shareholder level, within the company.  For example, if a shareholder holds 750 shares out of a total of 1,000 shares, that shareholder controls 75% of the votes at a general meeting of the company.

Shareholders do not make decisions on running a company, unless they are also directors when they would do so in that capacity or the Act or the constitution permits.

The directors manage the business and affairs (filing etc) of the company.  In small businesses, it is common for the major shareholder to be the managing director of the company.

Every company must have at least one shareholder and at least one share. 

Important notes:

1. Before a board (the directors or a sole director) makes any change to a company's details on the public register, it is essential that this has been authorised by proper internal documentation entered in the company's own records.  This applies particularly to shareholder and director information, but also to registered addresses and information regarding the annual meeting that has to be stated in annual returns.  A change on the public register is of no value unless this is attended to first.
   
   The true source of information regarding a company is its own records.  The public register will reflect those records, with the Companies Act 1993 requiring filing within a fixed period, usually 10 or 20 working days, in most instances.
    
2. Shareholding is notifiable formally to the Registrar of Companies on incorporation and in annual returns.  An annual return has to reflect the company's share register at the date the return is prepared in the month allocated to the company.  As a convenience to those companies that wish to do so, the Registrar allows a board to give informal notice of shareholding changes between incorporation and the first annual return or between annual returns.  The holders of newly issued shares or transferees of existing shares can be recorded in this way but only after the board has entered their names on the company's share register.  Shareholding details shown on the public register might have been entered from an annual return filed some months previously, so for up-to-the-moment information on who are the shareholders in a particular company, an inspection of its share register – usually kept at the registered office – would have to be arranged (sections 215-218 of the Companies Act 1993).