Shareholders’ Rights

Are you a startup entrepreneur and your investors just presented you with an offer? Do you have a partner in the business and you may be wondering how to divide the initial equity? Don’t worry! We’re here to help. The table below provides an overview of some of the key rights which shareholders in  private limited companies incorporated in England & Wales enjoy, together with references  to the applicable provisions of the Companies Act 2006 (the “Act”). 

The table is not an exhaustive guide to all shareholder rights under English company law,  but highlights those which are likely to be most relevant in practice to shareholders in small  and medium companies. The percentage thresholds listed are default levels under Act  – some of these thresholds may be changed, for example, by the company’s articles of association or in a shareholders’ agreement, so remember that the rules are flexible and don’t rely solely on the table below. Always take legal advice before signing anything.

Furthermore, you should be careful if your company has more than one class of share capital. In such cases, further advice will be required as to exactly which shares should be taken into account when calculating the relevant percentages, and also whether particular classes of shares enjoy each of the rights listed below (for example, the right to a dividend).