What is a shareholder?
A shareholder is a natural or legal person or another commercial company that owns at least oneshare in apublic limited company. By acquiring shares in a company, the shareholder acquires an ownership interest in a public limited company and can thus benefit from the company’s success (throughdividends or a rising share price). At the same time, however, losses incurred by the company also affect the shareholder’s investment.
Difference between majority shareholder, major shareholder and minor shareholder
This distinction relates to the extent of the shareholders’ participation:
As principal shareholder (also: majority shareholder) A majority shareholder is a shareholder who owns more than 50 percent of a company’s shares . This in turn gives the majority shareholder a great deal of power over the company. For example, they can replace board members or managers at C-level.
Although the major shareholder holds less than 50 percent, he still has a very high shareholding. In line with his stake in the company, he also has a major influence on the company‘s business decisions.
Finally, small shareholders only have a small stake in the company’s shares. Most private investors are small shareholders and invest in shares to make a profit, not to influence company decisions.
Profit participation of shareholders
The dividend gives shareholders a share in the profits of the joint-stock company, whereby the dividend may only be paid out of retained earningsand the reserves formed for this purpose in accordance with Art. 660 of the Swiss Code of Obligations. Shareholders are not entitled to interest on their share capital.
Are shareholders liable for the company?
Shareholders are not liable for the financial obligations of the public limited company in which they hold shares. In the event of insolvency, the shareholders’ private assets are therefore protected, even though they own parts of the public limited company. However, they may lose their entire investment in the event of insolvency.
What rights and obligations does a shareholder have?
The acquisition of shares also entails rights and obligations for the shareholder, which are defined in company law and set out in the articles of association of the stock corporation:
Rights of a shareholder
Property rights, including with:
- Right to dividends
- Right to part of the liquidation proceeds upon dissolution of the company
Participation rights, including with:
- Voting rights at the Annual General Meeting
- Right to participate in the Annual General Meeting
Property and information rights, including:
- Right to inspect the annual report and audit report
- Liability action against the Board of Directors in the event of breach of duty by the Board of Directors
Right to maintain the participation quota:
- Existing shareholders are entitled to additionally issued shares in proportion to their previous shareholding in the stock corporation
Duties of a shareholder
In this case, the shareholder is only subject to the payment obligation – when the share is issued, the shareholder undertakes to pay the amount fixed for the share.
When a public limited company is founded, the shareholder must pay up at least 20 percent of the nominal value of the shares , but at least CHF 50,000 (Art. 632 CO).