Most limited companies are ‘limited by shares’. This means they’re owned by shareholders, who have certain rights. Most companies have ‘ordinary’ shares, but you can apply an alphabet share that will provide different rights to a share. An ordinary share means directors get one vote on company decisions per share and receive dividend payments. A company limited by shares must have at least one shareholder, who can be a director. If you’re the only shareholder, you’ll own 100% of the company.
The price of an individual share can be any value. Shareholders will need to pay for their shares in full. In most instances, the share value is a small amount (for example, £1) to limit the shareholders’ liability to a reasonable amount.
What rights does a shareholder have?
Share rights are set out in the company’s constitution (articles of association) and usually entitle shareholders to:
- Dividends.
- Payment on the winding-up of the company.
- Participation in meetings of the company (including voting rights).