Directors VS Shareholders

Directors

Directors are appointed, by either the shareholders or the board of directors, to manage and/or operate the business. Their primary responsibility is to manage and make decisions on behalf of the company.

Shareholders

Shareholders are owners of the company and own shares, their main role revolves around having a financial stake in the company.

Roles & Rights of a Director

Management & Operations

Includes hiring and managing staff and overseeing day-to-day operations.

Decision-Making

It is important for directors to establish a meticulous approach to ensure effective decision-making. 

Fiduciary Duty

Directors have a fiduciary duty to the beneficiary, which in this case is the shareholders.

Representation Rights

Directors have the authority to represent the company during events such as contract negotiations and entering into agreements.

Appointment & Removal Rights

Directors have the right to be appointed to the board of directors and have the rights to participate in the removal of directors albeit through a formal process.

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Rights to Access Information

Directors have the rights to access to company information such as financial statements and operational reports.

Roles & Rights of a Shareholder

Investment

A shareholder’s primary role is to provide support financially in exchange for ownership of the company.

Attend AGMs

Shareholders must attend and participate in Annual General Meetings (AGMs) – a meeting for shareholders to understand the financial and overall health of the company from the directors.

Attend EGMs

Emergency General Meetings (EGMs) are not compulsory, but are necessary when certain matters arise. Some company matters urgently require shareholders to discuss and vote on.

Voting Rights

Shareholders have ownership and voting rights in the company, according to the number of shares they hold. Their voting rights are exercised during general meetings and when major business decisions need to be made.

Rights to Dividends

Shareholders are entitled to receive a portion of the company’s profit, by collecting dividends.

Rights to Attend Meetings

Shareholders have the right to attend meetings that involve them. During these meetings, shareholders may have to exercise their voting rights to make important decisions for the company. 

Sole Director & Shareholder of A Company

If you prefer full control of your company, this option to be the sole director and shareholder of a company is viable. But, is this the best decision? Below are some key points to note.

Sole Director

The sole director, also the sole shareholder, will manage daily operations and decision-making, ensuring fiduciary duty to the company’s best interest.

Sole Shareholder

The sole director can own 100% of the company’s shares and will be the sole shareholder and owner. He/She is entitled to 100% of the benefits and devidends as well.

Seperate Legal Entity

The sole shareholder and director’s personal assets remains a seperate legal entity from the company, and are not at risk of the the company’s debts.