Who owns a limited company?

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I have a quick query for someone. I have just set up a limited by shares company online. The process seemed relatively straight-forward, and I’m just waiting now to see if my application will be accepted. I’ve included myself as the company’s sole director, but I have issued a share to two friends who have helped me get this business started. But it has just occurred to me: who owns the business, them, or me? I am a shareholder and director, but I have also made them shareholders. Does that mean we all own the business together, or just me?

Answers

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Anyone who owns a share owns part of the company, so you and your friends all own the company together. How much each person own depends on the percentage of the business represented by their share(s). The fact that you are the only director is irrelevant in terms of ownership - a director is responsible for managing the business only; shareholders are the beneficial owners.

If you issued three shares of the same class and gave one to each of your friends, you each own ⅓ of the business - this means you actually have less overall control and profit entitlement than your two friends combined.

It is possible to alter the share structure after incorporation, so you should think carefully about whether this arrangement is fair or whether you should be retaining majority ownership and control. Once you have decided, put a Shareholders’ Agreement in place to confirm everyone's rights.

a year ago
 

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