Shareholder
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What is a Shareholder?
The term shareholder refers to an
individual, legal entity or other trading company that owns at least one share of a stock corporation. Shareholders who purchase shares of a company are
acquiring ownership interests in a stock corporation and can therefore benefit from the company's success (through dividends or an increase in share value). The company's losses, however, also affect the shareholder's investment.
Types of Shareholders
This distinction refers to the extent of the shareholders' participation:
Majority shareholders own more than 50% of a company's shares. Consequently, the majority shareholder has a great deal of control over the company. For example, he may be able to replace board members or senior executives.
Despite holding less than 50 percent of the shares, the minority shareholder may have a very high stake in the company. It is also likely that he will exert a significant influence on the business decisions of the company, depending on the size of his shareholdings.
Small shareholders, however, own only a small percentage of the company's stock. A majority of private investors are small shareholders who invest in companies for the purpose of making a profit, rather than to influence the decisions of the company.
Participation of Shareholders
Through the dividend, shareholders have a share in the profits of the joint-stock company, whereby (in accordance with Art. 660 of the Swiss Code of Obligations (CO)) the dividend may only be paid from the balance sheet profit and the reserves. Shareholders have no interest claims on their share capital.
Are shareholders Liable for the Company?
Shareholders are not liable for financial obligations of the corporation. The private assets of shareholders are therefore protected in the event of insolvency, even if they own a portion of the company. A bankruptcy, however, may result in the loss of the entire investment.
What are the Rights and Obligations of a Shareholder?
It is important to note that the acquisition of shares also comes with rights and obligations for the shareholder, which are outlined in the Stock Corporation Act and in the Articles of Association of the corporation.
Rights of a Shareholder
Property rights, including:
- Right to dividends
- In the event that the company is dissolved, the shareholders will be entitled to a share of the liquidation proceeds.
Participation rights, including:
- Right to vote at the general meeting
- Right to participate in the general meeting
Protection and information rights, including:
- Right to inspect the annual and audit reports
- Liability action against the board of directors in the event of breach of duty
Right to maintain the shareholding quota:
- The previous shareholders of the corporation are entitled to receive additional shares in proportion to their previous shareholdings
Duties of a Shareholder
Upon issuing the shares, the shareholder is responsible for paying the amount determined for the shares.
When founding a corporation, the shareholder must pay at least 20 percent of the nominal value of the shares, but at least CHF 50,000 (Art. 632 CO).
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