Who Are Those Directors V Shareholders

LETS TALK LAW TODAY ABOUT:

Directors V Shareholders

 

In this post I will talk about who are company Directors and who are the shareholders, if you want to start a company or have one, you need to read and understand this carefully.

 

WHO ARE DIRECTORS?

 

Directors are servants of the company, in other words they are employees of the company. They run the the day-to-day activities of the company and promote the success of the company for the benefit of shareholders.

 

Directors are entitle to salary and be paid for any service rendered to the Company. They are appointed and or remove by Board of Directors or Shareholders. 

 

They are the Trustees of the Company, and their primary duty is that of fiduciary duty and the exercise of due care, skill and diligence in the discharge of these duties, failure of this would be a reasonable ground for an action in negligence and breach of fiduciary duty against them.

 

WHO ARE SHAREHOLDERS?

 

Shareholders are the owners of the company, who hold shares in the company and have every right and liability arise related to the company. They are alpha and the omega of the company. 

 

Every shareholder has the right to vote for any decision the company is about to take, and vote according to the number of their shares.

 

Whenever a company has to take any decision, shareholders make the call, they vote according to the number of their shares.

 

This is why, if you or your group own the highest shares, lets say 51% shares, then you can always make the call in all the affairs of the company, because the rest of the shareholders are holding 49% and cannot override you in any decision (except in rare circumstances). 

 

But once you failed to have the majority shares, then, you don't have such power anymore, unless you go ahead and make alliance with those that if their shares and yours are combined together will make the majority shares, e.g. You have 40% and someone has 11% making 51%, then you can make the call together.

 

So understand this, normally founders of the Companies or CEOs hold a very small portion or percentage of the shares in the company they run, for example:

 

The Founders of the Company Alphabet Inc. popularly known as Google,  Larry Paige and Sergey Brin has only a combine shares of 38.8million representing 5.9% of the Alphabet total shares outstanding.

 

Larry has 19.8million shares representing 3.0% of the company's total shares outstanding and Sergey has 19million shares representing 2.9% of the company's total shares outstanding.

 

The current CEO Sundar Pichai owns 88,693 shares representing 0.01% of the company's total shares outstanding.

 

These three people I've mentioned with 3.0%, 2.9% and 0.01% ownership, are the Top 3 Insider Shareholders of Alphabet Inc.

 

If You understand this now, answer these questions:

 

- Most a Director have a share in the Company in order to be a Director?

 

- Can these three people Larry Page, Sergey Brin and Sundar Pichai make decision alone when it comes to Alphabet Inc. (Google) ?

 

Don't forget I'm a Lawyer.

 

Stay blessed.

 

Nuradeen Aliyu Sisa

itznsiesah23@gmail.com

Enjoyed this article? Stay informed by joining our newsletter!

Comments

You must be logged in to post a comment.

About Author