How are directors and shareholders of a company different?
How are directors and shareholders of a company different?
The rights and responsibilities of directors and shareholders in a company are very different. Ultimately the shareholders control the company by virtue of their shareholding, but the directors control the day to day business of the company.
Why are directors not obliged to keep shareholders informed?
In summary, directors are not obliged to keep shareholders informed in any detail about the day to day running of the company. There are certain things which a director must inform shareholders about / information that must be provided.
What are the rights of shareholders in a company?
The shareholder has NO right to either a salary or a director’s fee. Shareholders invest for returns in the form of dividends. Shareholders have no direct rights to the assets of the company, and cannot claim ownership of any physical or intangible asset in the company.
Can a director allot shares to an employee?
Further, as with allotting shares for employees, if the shareholders decide to allot further shares for the investment, a shareholder ordinary resolution is required. Following this, the shareholders will instruct the directors to allot the shares. Follow us on Twitter on @Greenawayscott1.
When do you need a director and a shareholder?
When incorporating a Limited by Shares company you will need a Director and a Shareholder. Both are pivotal to the general running of the company with the differences depending on the company type; Limited by Shares, Limited Liability Partnership (LLP) or Limited by Guarantee.
The shareholder has NO right to either a salary or a director’s fee. Shareholders invest for returns in the form of dividends. Shareholders have no direct rights to the assets of the company, and cannot claim ownership of any physical or intangible asset in the company.
Who are shareholders and who are not shareholders?
The latter are usually included to bring outside perspective to a company, and to hold the management and executives responsible and accountable to the shareholders (investors) and stakeholders (interested parties that are not shareholders, e.g. lenders, SARS, the community, employees, broader society, suppliers, licensors etc.).
How are directors appointed and removed by shareholders?
Directors are appointed or removed by the shareholders. Directorships carry extreme legal risks (refer below to more details on the roles and responsibilities of directors). However, a director does not have to be remunerated for their services, if they are already remunerated as employees.