Duty and Rights of Shareholders
The main duty of a member who is a shareholder in a Limited Liability Company with share capital is to pay the company, any outstanding amount of the purchase price agreed for the allotted shares. This becomes payable when the company makes a call for funds or where the terms of issue of the shares provide for the payment in installments.
The articles of association or the constitution set out the powers of the members and the powers delegated by the members to the directors of the company. The business of the company is managed by the directors, subject to the provisions of the articles of association or the constitution and the directions given by the members in general meetings. Fundamental matters must be ratified by the members, such as an alteration of the company's articles of association.
A dividend is a distribution of certain of the company's assets to its shareholders. Dividends can only be proposed by the directors. Where the directors propose a dividend, it must then be approved by the members. There is no legal obligation on a company to declare a dividend even where there are sufficient distributable profits available, unless its articles or memorandum of association or the constitution require it to.
A shareholder has the right to participate in the winding up of a company. Once the creditors and expenses of the liquidator have been paid, any remaining funds are returned to the shareholders in proportion to their shareholdings, unless the articles of association provide otherwise.
Members are entitled to certain information concerning the company:
- Copy of the Memorandum & Articles of Association or the constitution
- Copies of the minutes of general meetings and resolutions
- Copies of the registers kept by the company
- Copy of the unabridged financial statements, directors' report and auditors' report
- Copies of the unabridged financial statements of any subsidiary company for the preceding ten years