The Shareholder Role
A shareholder is an owner of a company, holding a percentage of its shares, which represents their ownership stake. For example, owning 50% of the shares means you own 50% of the company.
Shareholders vs. Directors
In simple terms, the Shareholders own the company, while the Directors manage it.
You can read more about the role of Directors here: What is a Director?
Requirements for a Shareholder
At Least One shareholder: A Pty Ltd company must have at least one shareholder.
Minimum Shareholding: Each shareholder must hold at least one share, which can be valued at as little as one cent.
Shareholder Duties
Key duties of the Shareholder include:
Voting on Major Decisions: Such as appointing directors or approving significant transactions.
Compliance: Ensuring the company meets legal and regulatory requirements.
Meeting Participation: Attending annual general meetings (AGMs) and other important meetings.
They will also be required to sign Formation Documents- Resolution of Members & Application for Shares.
Classes of Shares
The Class (aka 'type') of Shares that the Shareholder owns will determine their different rights within a company.
In most cases, new Companies are set up with ORD (Ordinary) shares as a standard unless you have had specific advice from a lawyer or accountant.
You can read more about the different Share Classes and what they mean in the article here: What are the Different Types of Share Class Codes?
Importance of a Shareholder Agreement
A shareholder agreement is a crucial document, especially if you have multiple shareholders or are considering using different share classes.
This document outlines the rights and obligations of shareholders, helping to prevent disputes by setting clear rules for decision-making and conflict resolution.
You can find this template in the Lawpath library here: Shareholders Agreement
FAQs
What if I am the only person in the business?
If you are the sole owner of the business, you will be listed as both a Shareholder & Director, holding 100% of the shares.
Can I change shareholders?
Yes, shareholders can transfer their shares to others, subject to the company’s Constitution and Shareholder Agreement. You can add or remove Shareholders at any time after registration. Our Business Services team can help here: Company Changes
What if a Company is a Shareholder?
Corporate Shareholders can be added as part of a Corporate Trustee structure. This is very popular for protecting your company assets and additional risk/privacy factors.
If you would like to find out more, you can check out our Assisted Trust set-up page.
How do I add a Corporate Trustee?
You can check out our article on this here: Corporate Trustee
Does the Shareholder have to be an Australian resident?
No, unlike a Director, there are no requirements for an Australian shareholder. However, registering a company ABN if there are no Australian shareholders within the company can be problematic and take the ATO additional time to process (up to 28 days).
Can a Shareholder be on a visa?
Being able to run a business or company while on a visa will depend on your specific Visa and working rights within Australia.
Some visas will limit the number of working hours, and others may have stricter rules.
We would suggest consulting the terms of your visa with the official website of the Department of Home Affairs in Australia or seeking advice from a qualified Immigration Lawyer or professional before moving forward.
Can I keep my Shareholder information private?
All shareholders will be listed on the ASIC register unless you have an Oppression Order. This information is publicly available, and can be downloaded wth the Company Information directly from ASIC by any member of the public.
If you were looking to protect your details, you might want to consider a Corporate Trustee Structure (see above).
Select the image below to see full example of information from the ASIC website:
Ready to start or resume your new company registration? Get into the application here: