Shareholder

“What is a shareholder?”

A shareholder is someone who owns part of a company. They hold shares, which represent a percentage of ownership.

Shareholders don’t usually run the company day to day (that’s the job of the director) but they still have important rights and can benefit when the business does well.

“What does a shareholder do?”

Shareholders:

  • Invest in the company by owning shares
  • Can earn dividends when the company makes a profit
  • May have a vote on major decisions, like appointing directors or changing the company structure
  • Can sell or transfer their shares to others
  • Help shape the long-term future of the company (especially in businesses with multiple shareholders)

In small businesses, the shareholder and director are often the same person (especially when there's only one owner)

“How do I prove someone is a shareholder?”

Shareholders are recorded in two ways:

  1. On a share certificate (a legal document showing how many shares they own)

OR

  1. In the company’s share register (an internal record of all shareholders and share movements)

These documents help track ownership and are useful for compliance, fundraising, and resolving disputes.

Here's an example:

Let’s say you start a business and register it as a private company (Pty) Ltd.

If you own 100% of the shares, you are the only shareholder.

If you bring in a business partner and give them 30% of the shares, they become a shareholder too (and now own part of the company)

“What rights do shareholders have?”

Shareholders can:

  • Receive a share of company profits (via dividends)
  • Vote at shareholder meetings (depending on the number and type of shares they own)
  • View the company’s financial statements
  • Be involved in decisions like changing directors or amending the MOI
  • Share in the proceeds if the company is sold or liquidated

The exact rights depend on your Memorandum of Incorporation (MOI) and the type of shares issued.


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