What are the responsibilities of a shareholder?


We are preparing to incorporate a new limited company, and will have at least four shareholders involved in the company. Two of these prospective shareholders are going to be fairly “hands-off” regarding the company’s day-to-day activities, which suits my partner and I just fine. I was wondering, however, whether a shareholder has any statutory responsibilities that must be adhered to. What exactly must a shareholder do?



Shareholders are the owners of a company. They have the power to choose and appoint directors and decide how the business should operate. In most companies, shareholders appoint themselves as directors.

All shareholders, whether fully involved in the business or hands-off, have a legal responsibility to pay the nominal value (not market value) of their shares to the company, either upon purchasing the shares or at the company’s request at a later date. This is known as their ‘limited liability’ - it is their financial obligation to the company.

Depending on the rights attached to their shares, shareholders normally receive a percentage of company profits. Their entitlement is relative to the number and value of their shareholdings.

Most shareholders also have the right to vote on certain matters pertaining to the business. These decisions are taken at general meetings or by written resolution. Again, the extend of thier voting power depends on the number of shares they own.

2 years ago

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