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Directors vs. Shareholders: Understanding Key Roles in Your Company

Stefan on 6 February 2024
Directors vs. Shareholders: Understanding Key Roles in Your Company

When you start a company, you'll hear about directors and shareholders a lot. They're different, but both are super important.

In simple terms, Directors run the show day-to-day, and shareholders own parts of the company and hope to make money from their investments. Both play crucial roles in making your company successful.

Directors: The Bosses of Daily Tasks

Think of directors as the captains of your company ship. They handle the day-to-day running, making sure everything's smooth sailing. They're the ones the government talks to about your company. It's like they're the face of your company to the outside world.

Pro tip: Directors are normally appointed as the company's registered representative at SARS.

What Directors Do:

  • Planning: Directors decide where the company should go.
  • Finances: They watch the company's money.
  • Big Choices: They make important decisions.
  • Problem Solving: They fix company problems.
  • Meetings: They attend important meetings.
  • Legal Compliance: They ensure the company follows the law.
  • Shareholder Updates: They inform company owners.

Do You Need Directors?

Yes, a company is required by law to have at least one director.

Shareholders: The Investors

Shareholders are the people who put money into your company hoping it'll grow and make more money. They own parts of the company, called shares, and get paid back depending on how big their piece is.

Do Shareholders Have to Do Anything for the Company?

Shareholders only invest in companies for a return on their investments. They are not employed by companies and generally do not have to do any tasks for the company, but normally companies do inform shareholders of meetings that they can join to inform them of the companies' future plans - ensuring them that their investments aren’t being wasted.

Must My Company Have Shareholders?

Yes, a company is required by law to have at least one shareholder.

Why Aren't My Shareholders Listed on My Company Registration Certificates?

Shareholding info isn’t captured by the CIPC department as part of the company registration process. Shareholding is determined internally by the company and confirmed on share certificates.

I'm the Only Owner of My Company, Do I Need a Share Certificate?

If you’re the only director and owner of your company, you would have to issue a share certificate to yourself in order to indicate that your company doesn’t have any other shareholders.

You would also need a share certificate when opening a business banking account, even if you’re the only director/shareholder of your company.

What Are Share Certificates and Where Do I Get Them?

Share certificates are created after a company is registered. Each shareholder of your company must receive a share certificate to confirm their ownership within your company company.

Luckily, share certificates are included with Govchain’s new company registration package.

Can Someone Be Both a Shareholder and a Director?

Yes, in many companies, especially the smaller ones, it's pretty normal for a person to be both a shareholder and a director. But remember, just because you own shares doesn't mean you have to be a director too.