Shareholders| A Complete Guide about Company Shareholding

Introduction to Shareholders of a Company

“The shareholders are the owners of the company. They are the ones who buy shares by investing in the company and in return get certain rights. These rights flow from both contract law and statute. The shareholders will own the company in proportion to the number of shares they hold. When the company is registered at Companies House, the entrepreneur becomes a shareholder of the company“.

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What is Included?

  • Introduction to Shareholders of a Company
  • Register of shareholders      
  • Persons with significant control (PSC) Register

The power of a shareholder in a company comes from the number of voting shares one holds in the company. A shareholder who holds 100% of shares can pass all resolutions at will if it is legal. 75% can pass special resolutions, over 50% can block an ordinary resolution, over 25% can block the special resolution, 10% can demand a poll vote and 5% can circulate a written resolution, requisition a general meeting and circulate a written statement.

In this article, we will be looking at shareholders of private companies limited by shares and public companies trading publicly. There are two requirements needed when joining a company to become a shareholder, that is: the person must agree to become a shareholder of the company and his name must be entered in the register of members. It is only on entry of the name in the register of members will the person becomes a shareholder of the company. Every company must also keep a register of those persons who own shares in it. There are also different ways in which a person may become a shareholder of a company:

  1. Subscribers to the memorandum
  2. Buying shares from the company
  3. Buying shares from existing company shareholders
  4. Receiving a gift of shares
  5. Inheriting shares
  6. Insolvency of the shareholder.
shareholders
shareholders

The director of the company should take the initiative to enter any new shareholder’s name and other details onto the register as soon as possible to allow him to take up his rights as an owner of the company. This should be done within two months after the date of the transfer of shares is submitted to the company.

Register of shareholders

This document is important because it records the past and current owners of the company. The company must keep this information either at the public register at Companies House or the company’s registered office for inspection. The inspection is available for any shareholder free of charge and to any others on payment of a fee. The register can be kept in either electronic or hard-copy form. It must show:

  1. Each shareholder’s name and address
  2. The date of entry into the register of each shareholder
  3. The number of shares owned by each shareholder
  4. The class of share if there’s more than one
  5. The amount paid upon each share.

Any changes in the membership of the company must be updated on the register to reflect this change. If the shareholder leaves the company then the date the shareholder left must also be included on the register. It is a criminal offense by the company and any of its officers in default, punishable by a fine if the register of members does not contain the correct information.

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Persons with significant control (PSC) Register

The law requires companies to keep a PSC register to increase transparency about owns the company. This aims to increase trust for third parties dealing with the company. This register must also be made available for public inspection.

A person of significant control is one who owns or controls more than 25% of the voting rights, has the right to appoint or remove a majority of the board of directors, and has the right to exercise, or who exercises, significant influence or control over the company. A company must also be entered in this register if it owns more than 25% of the shares.

The information to be included in the register: the individual’s name, date of birth, nationality, country of usual residence, residential address, and address for service of documents. For the company: corporate or firm name, registered or principal office, the legal form of the entity and the law by which it is governed, the register of companies in which it is entered, and its registration number.

Private companies can, however, choose not to keep their PSC register, and alternatively, they can ensure that the necessary information is filed and kept up to date on the central register for the company at the Companies House.

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