Shareholders have rights as shareholders, whether or not they are directors of a company as well.

Many shareholders’ rights are set out in the company’s Articles and any Shareholders’ Agreement. These may extend or reduce some rights. However, the Companies Act 2006 also sets out certain rights that shareholders have and a list of them is below. This is not an exhaustive list although sets out the main rights in practice. In some cases, these rights may be altered by the Articles and/or Shareholders’ Agreement, and so these must also be considered.

All Shareholders have the following rights:

• To be given notice of any shareholders’ meeting (called General Meetings) (section 310)
• To vote at a General Meeting – the voting power depends on the proportion of shares you have (section 284)
• To be entered in the company’s Register of Members (section 113) – the company and its officers in default commit a criminal offence if they don’t do this
• To be given a share certificate (section 769) – the company’s officers in default commit a criminal offence if they don’t do this
• To inspect minutes of General Meetings for free and be given a copy of them for a fee (section 358) – the company’s officers in default commit a criminal offence if they don’t do this
• To inspect the Register of Members (shareholders) for free and be given a copy of them for a fee, unless a court decides that the request was made for an improper purpose (section 116)
• To inspect the Directors’ Service Contracts for free and be given a copy of them for a fee (section 229) – the company’s officers in default commit a criminal offence if they don’t do this

Shareholders with at least 5% of the company’s shareholding have the following rights:

• All the above plus:
• To require a General Meeting be called if there hasn’t been one for 12 months (section 303)
• To require a written statement for a General Meeting to be circulated (section 315) – the company’s officers in default commit a criminal offence if they don’t do this

Shareholders with at least 10% of the company’s shareholding have the following rights:

• All the above plus:
• To have the company’s accounts audited (section 476) – a request must be made during the financial year in question and more than one month before the year end

Shareholders with at least 25% of the company’s shareholding have the following rights:

• All the above plus:
• To block a special resolution (section 283) – while most decisions of shareholders are passed on a simple majority, special resolutions require 75% or more of the votes

Shareholders with at least 50% of the company’s shareholding have the following rights:

• All the above plus:
• To pass or block an ordinary resolution (any decision that is not a special resolution, i.e. the vast majority of shareholders’ decisions)

Shareholders with at least 75% of the company’s shareholding have the following rights:

• All the above plus:
• To pass a special resolution

To obtain advice on what rights you have in your particular situation or how best to enforce your rights, please contact us.

Gary Cousins
Business Solicitor