Shareholders

Limited companies are owned by members who own a part, or ‘share’, of that company. These individuals are known as shareholders. Limited by guarantee companies do not have shareholders. Instead, their company members are called guarantors. Any individual or corporate body can be a shareholder. As partial owners of the company, shareholders are typically entitled to receive a percentage of business profits in the form of dividends.The main duties of a shareholder are to appoint directors and determine their rights, make special company decisions and provide financial security in the event of insolvency. This financial security is commonly referred to as ‘limited liability’ and usually carries a nominal value of £1 per share owned.

Most limited company draft a shareholders’ agreement to protect the rights of each company owner. These agreements usually include details on the prescribed particulars of each share, rules on how and when new shares can be issued and guidelines on the decision-making process for big company changes.

If you would like to add new shareholders during the company formation process, this can be done quickly and easily using our online company formation application. If you would like to add more shareholders after incorporating your company, you are free to do so at any time – but you must do so by sending an updated annual return to Companies House. You are free to send this updated annual return at the time of issuing a new share or at the time of your original annual return deadline.

The same process can be followed in order to remove a company shareholder.