What are Shares and Who Are Shareholders?

WHO HAS AN INTEREST IN THE COMPANY?
• Shareholders- who are also known as members, make investments into the Company by buying shares in it and as such have a financial interest in it and are called members because of their shareholding. Rules relating to shareholders are quite complicated and if more than one shareholder, always, always get a shareholder’s agreement in place!

• Shares – The number of shares that can be issued in a Company is limited by the authorised capital, although this can be raised at any time and to any level, subject to agreement of the members. There is no set formula for how many shares to issue, except that at least one share must be issued on incorporation. In practice, this is usually quite easy since the shareholding of a Company determines its interest and “ownership”. Naturally, the more shares a person holds, the greater their rights are. For example, generally a holding of more than 50% of the issued shares in a Company will be sufficient to control the Company, determine the Board of Directors and the day to day running of the Company.

[bctt tweet=”Often clients are encouraged to set up a limited company and issue shares in equal amounts which is fine if there is a shareholders’ agreement in place ” username=”Lawhound”]which covers a decision where equal shareholders cannot agree and are in a deadlock. We deal with small businesses whose shareholders are often related, friends and also directors of the business so there is no outside party to help when things go wrong and the argument can brings a business to its knees. It’s essential you take practical legal advice at the start, a tax benefit won’t help you if your business is not in profit as you fail to agree on all the essentials. Get it sorted today, its not a complex step nor an expensive one. Our plans start from just £995  and compared with the £1000s plus you will spend to salvage a business in trouble over disagreement its a drop in the ocean.

Talk to us today about how we can help you sort out your shareholding nightmares by calling 01244 300413