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Shareholders Rights

Oct 19, 2015

The legal rights for shareholders are complex. They depend on the shareholder's agreement with the company, the company's articles of association, and the terms under which the shares are issued. However, certain general rights are guaranteed under the provisions of the Companies Act 2006.

 

Am I entitled to a share of the profits?

If a company has made a profit then shareholders are generally entitled to a portion of those profits in the form of a dividend. This may vary according to the type of share. Not all companies pay dividends, however, and they are not legally bound to do so. Your share still has an intrinsic value as long as the company is solvent, and thus may be sold at any time. If the company is wound down, payments must be made to creditors, after which any remaining assets should be divided among shareholders.

 

Do I have a vote?

Company shareholders can attend the general meeting and usually have a vote. However, some shares may be non-voting or have a vote only under specific circumstances, while other shares may carry multiple votes. Shareholders have a statutory right to appoint a proxy to attend and vote on their behalf, to requisition a general meeting and to have a written resolution circulated to all members. Shareholders are also entitled to receive a copy of the company's annual accounts, and to be assured that the company is being run in a lawful manner.

 

Am I entitled to a certificate?

While there is no absolute legal requirement for a company to issue a paper share certificate to shareholders, most companies do so. What you do have a right to is to have your name listed in the company's Register of Members. This is the legal proof that you are a shareholder, with the rights that such a status entails.

You are also entitled to inspect the company books, including the constitutional documents. Inspecting these documents is highly recommended.


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