A Guide to Limited Company Shares and Shareholders | 1st Formations (2024)

This is the name given to anyone who owns ‘shares’ in a company limited by shares. As a shareholder, you own part of a company in relation to the proportion of shares you hold. A company can have just one shareholder or many shareholders. Each one is entitled to receive a portion of profits in relation to the number and value of their shares.

Shareholders are commonly referred to as 'members'. The first members in a company - the people who register the business and agree to become members - are also known as 'subscribers' because they subscribe their names to the memorandum of association during the company formation process.

No. A shareholder owns a company through the purchase or acquisition of shares. A director is appointed by those shareholders to manage the operational activities of a company.

However, a shareholder can also be a director. This is very common in small companies and start-ups. In many cases, just one person will assume the role of sole shareholder and sole director.

Similar to director information, some shareholder information does appear on the public register.

Shareholders own shares in a company. The ‘nominal’ value of their shares is the amount they are liable to pay toward business debts.

Shareholders receive a portion of company profits in relation to the number and value of their shares.

They are not responsible for the day-to-day activities of the business unless they are also directors. Company owners will only make decisions about significant matters such as changing the name of the business, appointing, or removing directors, changing directors’ powers and altering the articles of association.

Our latest videos on shares and shareholders

A share is a piece of a company limited by shares. Each piece represents a certain percentage of the company. Anyone who owns shares in a limited company is called a 'shareholder' or 'member'.

The number of shares held by each member determines how much of the company they own and control. They normally receive a percentage of trading profits that correlates with their percentage of ownership.

Here are some simple examples of popular share structures:

• One issued share = 100% ownership of the company.
• Two of equal value = 50% ownership per share.
• 10 of equal value = 10% ownership per share.
• 100 of equal value = 1% ownership per share.

Shares have a nominal value and a market value:

• The nominal value, which is usually £1 (although this can be set at any value), is the minimum amount a member agrees to pay to take up a single share. The total nominal value of members' shares is the sum they are legally required to pay towards company debts when the business is wound up. Therefore, it represents the limit of a member's liability.
• The market value of a share is the amount it is worth when it is sold. This will often vary from the nominal value.

The difference between the nominal value and market value is known as the share ‘premium’.

Our sister website, Quality Company Formations, provides a specialist Multiple Share Class Package for anyone who wishes to set up a limited company with multiple share classes.

This package will also allow you to upload bespoke articles of association, as opposed to adopting Model articles from Companies House.

The incorporation process will typically take up to 24 hours to complete, and your new company will be ready to trade as soon as it is approved by Companies House.

1st Formations provide a Transfer of Shares Service at a cost of £69.99, and an Issue of Shares Service at a cost of £79.99. We also provide a Conversion to Multiple Share Class Service starting from just £149.99.

All services are delivered by our in-house Company Secretarial Team. Please call 020 3984 5387 for more information.

Ready for more? Explore our blogs.