When you’re new to entrepreneurship, there is a lot of business jargon to learn, especially if you’re forming a firm for the first time. You must designate shareholders in addition to deciding on the amount of paid-up capital and the number of shares for your firm. So, who are the company’s shareholders, and what are the roles of shareholders in the overall operation?
What are Shareholders?
The company’s owners are the shareholders, often known as members. Shareholders can be individuals or corporate bodies, such as a Sdn. Bhd., who subscribe for shares and own a portion of the company (buy shares). There can be up to 50 shareholders in a private limited business. They have indirect control over the company’s operations because they financially support the company.
Roles of Shareholders
Even though shareholders do not personally run the company, as owners of the company, they are liable for any quantity of unpaid shares owned. These are some of the responsibilities of shareholders:
– Allow the board of directors to raise the paid-up capital or issue new shares
– Create and amend a constitution, if exists
– Approve the sale or purchase of real estate in the company’s name
– Approve the financial statements that the directors have prepared
– Approve transactions worth more than RM250,000, or between RM50,000 and RM250,000 if the amount represents more than 10% of the company’s net assets
– Appoint or remove corporate directors by ordinary resolution
– Approve directors’ salaries (for public companies)
– Hire or remove auditors (for public companies)
– In such a circumstance, the director or substantial shareholder in question must abstain from voting at the meeting
– Approving or rejecting any arrangement or transaction involving the purchase or sale of significant firm property or undertakings
– A dividend declaration
– Approving the firm’s financial statements
– Closing the company through voluntary liquidation
– Accepting or rejecting a public company’s share capital change or reduction
Rights of Shareholders
Shareholders have the right to request that directors hold shareholder meetings to discuss business matters. They can voice issues and inquiries about the company’s actions made by directors. Unlike directors, shareholders receive a percentage of the company’s annual profits as dividends.
The positions of shareholders and directors might be held by the same or distinct people. They play a variety of roles in the organization to ensure that it runs smoothly and profitably. You may have gotten an invitation to become a shareholder for a company if you are not launching your firm. As a result, it is critical to understand the tasks and responsibilities of the positions to ensure that you are prepared to assume responsibility and obligation for the organization.