Company shares and shareholders
Key points:
- People become part owners a company by becoming holders of shares. They are called shareholders or members.
- If a company issues shares, it must tell us about the shares that have been issued. Details of the shares and shareholders must be kept up to date on the company’s share register.
- The company must then keep these details up to date if they change.
Shares, share capital, and share structures
When you set up a company that issues shares, it will have shareholders and a share capital.
A share is part ownership of a company. Shares are owned by shareholders also known as members.
Share capital represents the total amount of money that the company raises from issuing shares.
The share structure of a company is the way share ownership is divided among shareholders. There can be different types and classes of shares, with each type and class having different rights and obligations. These can be found in the company constitution or replaceable rules or shareholder agreement shareholder rights and responsibilities.
Share register
When a company issues shares, it must keep its own record of all the shares that have been issued. This is called the register of members or share register. There are rules about what information it must contain.
See more about Share, shareholder and register requirements.
Shareholders
Who can be a shareholder
A member is an entity that can own property, sue or be sued.
A member of a company can be an individual person, a company, or a body politic, such as a state government.
A business name is not a legal entity and therefore cannot be a member. Estates and trusts cannot hold shares in their own right – they must nominate an executor or a trustee.
The Corporations Act 2001 does not specify a minimum age for a member of a company. However, a company may decide if it wants to set a minimum age for a member.
All companies must have at least one member. Proprietary companies must have no more than 50 members that are not employees of the company. There is no limit on the number of members of a public company.
Rights and responsibilities of shareholders
Shareholders do not own the company’s assets, and they are not responsible for the day-to-day running of the company. For most companies, shareholders can access some company information and vote on some company decisions. Their rights may depend on the class of shares they own.
Rights of shareholders are set out in the Corporations Act. Depending on the company, the rights of shareholders may be set out in the:
- replaceable rules from the Corporations Act
- company constitution, if it has one
- company shareholders agreement, if it has one.
Learn more about shareholder rights and responsibilities.
Some companies pay dividends to shareholders out of company profits. Company directors choose when and how to pay dividends.
Tell ASIC about changes to shares and shareholders
Companies must tell us about certain changes in relation to their shareholders, shares or share structure.
See more about Company share and shareholder rules and changes.