Role of Shareholders

Topics: Corporation, Types of companies, Limited company Pages: 4 (1038 words) Published: March 5, 2007
In this assignment we are going to explain the role of shareholders, directors and partners in the different types of business; and then we will see the importance of legal constraints on decision making within business organisations.


There are no shares in the sole trader and partnership ownership; that is why shareholders do not apply in these two types of businesses. In Private Limited Companies, there must be at least two shareholders but no maximum number. The principal 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 shares allotted to him/her. This sum becomes payable either where the company makes a call for funds or, in circumstances where the terms of issue of the shares provide for the payment of instalments, on the payment date. In the Private and Public Limited Companies, the shareholders choose the board of directors. In Public Limited Companies, the shareholders own the company as the share can be traded on Stock Exchange.

The shareholders choose the board of directors, and then those directors choose the managing director. That is why you can have a director only in a company and not in the other types of business such as sole trader and partnership. The directors are responsible for the management of the company. As the head of the company, the directors are also responsible for ensuring that the company does everything that it is obliged to do by law. Every company director has a personal responsibility to ensure that statutory documents are delivered to the Registrar when required. The director of a limited company has ten months to get their accounts in. The director of a PLC has seven months. If the company accounts are received late a fine will be issued (this will vary depending on the length of delay and whether it is a PLC/LTD company).

3- THE...

Bibliography: Denis KEENAN , Sarah RICHES
BUSINESS LAW, fifth edition
PAGE 110- 132
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • shareholder Essay
  • Role Of Leaders In Establishing Relationships With Shareholders Essay
  • roles Essay
  • Essay on role of communication
  • role of insurance Essay
  • Role of It Essay
  • role stress Essay
  • Shareholders Equity Essay

Become a StudyMode Member

Sign Up - It's Free