Shareholder rights

Shareholder rights of a limited company registered in the United Kingdom is spelled out in the Companies Act 2006.

Minority shareholder rights

Generally, minority shareholders have no say in the management of your company and in the running of your business.

In other words, a minority shareholder cannot do anything if the management of your company is inefficient. It is only the majority shareholders who can take action.

Therefore, your directors must act in good faith and in the interests of your company as a whole at all times.

Majority shareholder

On the other hand, majority shareholders can do anything permitted by the Memorandum and Articles. They can ratify almost any transactions, even retrospectively, in general meeting.

For instance, a sole shareholder can sue your company in his own name to protect his individual rights. For example, to compel board to accept his vote at the general meetings.

As a matter of fact, if there is unfair prejudice, fraud or gross negligence, your shareholder has the rights to call in the Department of Trade and Industry to investigate your company. In some circumstances the court can take actions against your company. However, your shareholder wanting to take action must hold at least 10% of your company shares.

Consequently, your directors may then lose the protection of limited liability. Thus, the court may order directors to compensate your company or your shareholder for loss.

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