The difference between Shareholder and Director in Limited Company
Who are Shareholders?
Shareholders are the owners of the company. Usually they are called members. They have a minimum of one share in the company. The more shares a shareholder has, the more business he/she owns. It means he/she has more power to make decisions, is entitled for more profit and is more liable for debts.
If a company is limited by shares it means that shareholder are the owners and they have certain rights. Shareholders can vote and make changes to the company. They are the beneficial owners of the company. Shareholders have the full control over the company, they are entitled for the percentage of profit and directors of the company are managed by shareholders.
Who are directors?
Directors are managing the company and they are responsible for financial reports and accounts of the company. They make sure their decisions about company’s business bring profit.
- follow the company’s rules, shown in its articles of association
- keep company records
- filing the annual accounts for their company
- filing the confirmation statement for their company
- must tell Companies House about changes in their company such as change of registered office or the appointment of a director or the termination of an appointment
- filing Company Tax Return
- tell other shareholders if you might personally benefit from a transaction the company makes
- pay Corporation Tax
- register for Self Assessment and send a personal Self Assessment tax return every year
Usually directors hire people like accountants or lawyers to help with their duties but the responsibility for company’s records, accounts and performance is still on directors.
Director may be fined, prosecuted or disqualified if he/she does not meet responsibilities as a director.
The owners of the business hire a director to manage the operations and finances on their behalf.
The same person can be both a shareholder and director.