Shareholders in an Irish Company

Shareholders are people or companies which invest in an Irish company in return for shares. These shares give the holders various rights, such as the right to vote at general meetings, the right to receive a dividend and shareholders have the power to remove or appoint directors.

A Single Member company can now be incorporated where the director wishes to hold the entire share capital. The minimum number of shareholders is one, the maximum number of shareholders in a private limited company is fifty. Corporate shareholders are allowed and shares may be held jointly by two or more people.

The members of a company exercise control over the company at its meetings. The main statutory provisions concerning meetings of a company are set out in the Companies Act. All companies, except single member companies, must every year hold an annual general meeting.

Members of Irish companies have the right to inspect:

  • Register of shareholders
  • Register of directors and the register of directors’ interests
  • The Company Constitution / previously called the Memorandum & Articles of Association
  • Minutes of General Meetings and Resolutions
  • Financial statements, directors’ report and auditors’ reports
  • Financial statements of any subsidiary company for the preceding ten years

Authorised – Nominal Share Capital

The authorised or nominal share capital of a company is the amount of shares that a company has available for future allotment. In order to avoid having to increase the share capital at a later stage it is usually set at a high figure of €50,000. Shares should be denominated in Euros (€’s).

Issued Share Capital

The issued share capital is the amount of shares that a company has issued out of its potential nominal share capital.

Allotted Share Capital

Allotted shares capital is the total value of the shares that the board of directors has issued over and above those initially issued by the company’s registration agent. They are referred to as allotted because they are being issued for the first time and therefore are not being transferred from one party to another.

The value of Shares

The term nominal value is used for a company’s shares since the true value will depend on how much a third party or existing shareholder is willing to pay for shares in the company. All shares with a nominal value must have had at least the nominal value paid into the company.

Ordinary and Preference Shares

In general there are two types of shares ordinary and preference. Preference shares provide a benefit over and above those available to ordinary shares. The benefit will relate to either voting rights and/or payment of company dividends depending on the provisions of the articles of association or the constitution.

Shares in a New Irish Company

The minimum issued share capital is €1 in the case of a Single Member Company. In the case of most domestic Irish companies we will initially issue 100 with a nominal value of €1 each.

Member and Shareholders

The initial subscribers to a company’s constitution are deemed to have agreed to become members of the company. Any person or company who agrees to become a member of a company and whose name is entered in its register of members will become a member of the company. A member is a person or company who participates in the capital of a company and is registered as such.

The register of members is a register which must be kept by every company. The register must ordinarily be kept at the company’s registered office. However, it may be kept elsewhere – although not outside the State for the purposes of being updated. Every company is required to notify the Registrar of Companies of the location at which the register is kept and of any change in that address. The register is open to inspection to every member free of charge and to any member of the public on payment of a fee. It must set out the following information:

  • Members’ names
  • Members’ addresses
  • Number of shares held by each member – in the case of companies having a share capital
  • The date on which each person was entered in the register
  • The date on which each person ceased to be a member of the company

A shareholder is a person, partnership or body corporate who holds a share or shares in a company. A member of a company which is limited by shares must be a shareholder in the company. In practical terms, a shareholder will invariably be a member of a company. However, it should be noted that a person who purchases shares in a company, while being a shareholder from the date of purchase, will not become a member of the company until their name is entered into the register of members.

A company may be permitted by its Memorandum and Articles of Association or the constitution to issue different classes of shares which may differentiate between the rights of the shareholders in the company.

Shareholders’ Statutory Pre-emption Rights

A member’s shares in a company are transferable personal property. In a private company however, restrictions can be placed on the transfer of shares. This restriction is normally implemented by granting the directors of a private company the discretion to refuse to register the transfer of shares to a person of whom they do not approve and/or requiring the shareholder who wishes to sell their shares to first offer those shares for sale to the existing members of the company.

Section of the Companies Act, 2014 gives the existing members of a private company a Statutory ‘Pre-emption’ right. This means that, where new shares in the company are issued, the existing shareholders have an automatic right of the first refusal to purchase these shares in proportion to their existing shareholdings. Parties other than the existing shareholders will, therefore, only be entitled to purchase newly issued shares in the company if the existing shareholders decline to exercise their pre-emption rights.

Under the Statutory Pre-emption scheme, the offer of shares to the existing shareholders must be served to the members and must provide a period of not less than 21 days during which the offer can be accepted and during which the offer cannot be withdrawn.

The Statutory Pre-emption rights can be removed by the memorandum of association, the articles of association or by a special resolution of the company passed by 75% of those members voting. Where a resolution to this effect is to be put before a meeting of the company, in addition to the notice of the meeting, the directors must also furnish the members with a written statement explaining their reasons for the proposed departure from the Statutory Pre-emption scheme.