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Shareholders own a company as they have invested in it, aiming to receive dividends or growth in the company value and their shares. Upon company creation, the founders of a company need to figure out how many shares to issue, to whom, and in what proportion. Generally, founders issue shares to themselves. Ownership of shares is recorded through share certificates given to the shareholders. As the company continues to grow, it can issue more shares and raise more capital to run its operations.
Now, the questions are:
These topics are exactly what we will talk about in this article. Read on.
A company can be of two types: a private limited company and a public limited company. A private limited company is generally closely held and can be managed by families, groups of friends, and business partners. Meanwhile, a public limited company may offer its shares even to the public on a stock exchange.
Private limited companies are further divided into two types: an exempt private limited company and a merely private limited company.
An exempt private limited company is a very small company. This type of company normally has a significant restriction on the number of shareholders. It is exempted from filing its accounts with ACRA. Its minimum number of shareholders is one and it is not required to have any additional number of shareholders. As far as the maximum number of shareholders is concerned, it cannot have more than 20 shareholders. Shareholding in this company can be with individual shareholders only (and not companies).
A private limited company can have a maximum of 50 shareholders. Its number of shareholders cannot exceed 50; otherwise, it will have to convert itself to a public limited company. Shareholding in this case can be with a corporate entity.
A public limited company does not have any limit when it comes to the maximum number of shareholders.
A private limited company and public limited company can have corporate shareholders. Meanwhile, an exempt private limited company is not allowed to have any corporate shareholders.
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