Shares and shareholders are at the very heart of a UK company. They determine who owns the business, how profits are distributed, and who has decision-making powers. For entrepreneurs, investors, and growing companies, understanding this area is crucial, especially with new rules being introduced under the Economic Crime and Corporate Transparency Act (ECCTA). FormationsHunt not only simplifies compliance but also supports you in managing changes. Whether you need a Transfer of Shares or the Issue of New Shares, our services ensure every update is filed correctly and on time.
This guide breaks down everything you need to know about shares and shareholders, with practical steps and how FormationsHunt makes compliance and management effortless.
1. What Are the Absolute Basics of Shares and Shareholders?
What is a share in a UK limited company?
A share represents a unit of ownership in a company. When you form a UK limited company, you create share capital, divided into shares. Each share carries rights, such as voting, receiving dividends, or sharing in profits when the company is sold.
What is a shareholder, and what is their role?
A shareholder (also called a member) is any individual, company, or entity that owns at least one share. They provide capital, take on investment risk, and benefit from the company’s success through dividends or capital gains.
What is the difference between a shareholder and a director?
- Shareholders own the company but don’t necessarily manage it. A shareholder may vote on major decisions.
- Directors are appointed by shareholders to run day-to-day operations.
One person can be both, but the roles remain distinct.
What is a Person with Significant Control (PSC)?
A PSC is someone who:
- Holds more than 25% of shares or voting rights,
- Or exercises significant influence over the company.
All PSCs must be reported to Companies House. With the new ECCTA reforms, PSC verification is becoming even stricter. As an ACSP FormationsHunt helps you record PSCs digitally and manage their verification process in line with Companies House requirements.
How many shares and shareholders must a UK company have?
A private limited company must have at least one share and one shareholder. There’s no upper limit, and multiple share classes can be created. FormationsHunt allows you to add shareholders easily and create new share classes within your Online Company Manager account.
2. How Do I Issue and Manage Shares Correctly?
Managing shares effectively ensures compliance and supports your company’s growth. Here’s how it works.
What is share capital, and how is it calculated?
Share capital is the total value of shares issued by a company. For example, 100 shares at £1 each equals £100 share capital. This nominal value is essential for structuring ownership but does not necessarily reflect the company’s actual market worth.
How do you issue new shares in a UK limited company?
The process involves:
- Board approval by directors.
- Updating the Register of Members.
- Issuing share certificates to new shareholders.
- Filing a Return of Allotment of Shares (Form SH01) with Companies House.
With FormationsHunt, you don’t have to prepare paperwork manually. Our Online Company Manager lets you add new shares digitally, auto-generate share certificates, and file SH01 directly with Companies House in just a few clicks.
What is the difference between ordinary and non-voting shares?
- Ordinary shares: The most common type, giving voting rights and dividend entitlements.
- Non-voting shares: Carry dividend rights but no voting power.
- Preference shares: Offer fixed dividend rights.
FormationsHunt supports different share classes, making it easy for founders to structure ownership flexibly.
What is a share certificate, and is it a legal requirement?
A share certificate is a document proving ownership, showing the shareholder’s name, share type, and number. And yes, it's a legal requirement, Under the Companies Act 2006, companies must issue share certificates within two months of an allotment or transfer (unless exempted, such as in electronic systems like CREST, which are rare for private companies). Certificates are the legal evidence of ownership, and with FormationsHunt, compliant certificates are instantly generated in your dashboard, ready to download or send.
Can a company buy back its own shares?
Yes, if permitted by the Articles and sufficient distributable profits exist. The process requires shareholder approval, filing Form SH03 with Companies House, and updating the share register.
3. What Are My Rights and Legal Responsibilities as a Shareholder?
Understanding your rights and responsibilities as a shareholder is key to protecting your interests.
What are the legal rights of a shareholder in a UK company?
Shareholder rights typically include:
- Voting at general meetings(e.g., director appointments, constitutional changes).
- Receiving dividends(if declared).
- Inspecting company records(e.g., financial statements).
- Participating in major decisions (e.g., issuing shares, amending Articles).
- Share in assets if the company is wound up (after debts).
What is a shareholders’ agreement, and do I need one?
A shareholders’ agreement is a private contract outlining rights, responsibilities, and dispute resolution between shareholders. It isn’t legally required but is strongly recommended to clarify roles, protect minority shareholders, and manage exits.
How is a shareholders’ agreement different from the Articles of Association?
- Articles of Association: A public, legal document filed at Companies House.
- Shareholders’ agreement: A private, flexible contract between shareholders.
Are shareholders personally responsible for company debts?
No. Liability is limited to the value of shares owned unless personal guarantees are given. This limited liability is one of the strongest reasons entrepreneurs choose UK companies.
4. How Do I Handle Transfers and Keep My Records Compliant?
What is the process for transferring shares to another person?
- Complete a Stock Transfer Form.
- Pay stamp duty if applicable (0.5% on transfers above £1,000).
- Update the Register of Members.
- Issue a new share certificate.
- Report the change in your next Confirmation Statement.
With us, share transfers are seamless, you simply need to go to the shop section under your Formationhunt Online Company Manager. Look for the "Transfer Of Share Service" and click on the buy now button, now you make the purchase and add the inputs(Details like shareholder count, confirmation statement needed or not, date or allotment, etc.), next we take over and update registers, generate certificates, and prepare filings automatically. And all that at an affordable and pocket-friendly price.
What are the tax implications of issuing or selling shares in the UK?
- Selling shares may trigger Capital Gains Tax (CGT) on profits.
- Stamp duty may apply.
- Certain family transfers may qualify for tax reliefs.
Always seek tax advice from a tax professional to avoid unexpected liabilities and navigate reliefs like Entrepreneurs’ Relief.
How do I update shareholder information at Companies House?
Shareholder details are updated through the Confirmation Statement (CS01), filed at least once every 12 months. If new shares are issued, you must submit Form SH01 within one month of allotment. For Persons with Significant Control (PSCs), changes must be updated in your company’s register and notified to Companies House within 14 days using the relevant PSC01–PSC09 form. FormationsHunt automates CS01 reminders and filing, so you never miss a deadline.
What are the new Companies House rules for shareholders under the ECCTA?
From November 2025:
- From November 2025 identity verification for PSCs and directors is mandatory.
- Local PSC registers are no longer required; all data is filed centrally.
- Stronger powers for Companies House to query or reject suspicious data and (from March 2024) allow scrutiny of shareholder data.
- Non-compliance risks fines or criminal penalties.
Our system includes assisted verification for PSCs and directors, making compliance smooth and stress-free.
5. Can a Company Have its Own Shares or Shareholders?
Can a limited company be its own shareholder?
No, a company cannot hold its own shares as an owner unless bought back and held as treasury shares (subject to strict rules). Treasury shares can be reissued or cancelled but don’t carry voting rights.
Can another company be a shareholder?
Yes. UK or overseas companies can hold shares in another UK company. This is common in group structures. Our system allows you to add both individual and corporate shareholders when setting up or updating your company.
How does an overseas shareholder register a UK company?
Overseas shareholders can own UK companies without being residents but may need additional verification (e.g., notarized ID) under ECCTA rules. They must comply with PSC reporting and identity verification by November 2026. They must:
- Provide proof of ID.(Passport or Driving License)
- Complete PSC verification.
- Supply extra documents depending on the jurisdiction.
As an ACSP FormationsHunt specialises in helping non-resident shareholders, our Non-Resident Package includes ID verification, registered office address, and worldwide document delivery.
6. What Is the Easiest Way to Manage All This?
Managing shares and shareholders doesn’t have to be overwhelming.
How can FormationsHunt help me with share management?
Through our Online Company Manager, you can:
- Issue, transfer, or buy back shares digitally and that too at a most affordable price.
- Generate compliant share certificates instantly.
- File SH01/CS01 updates directly to Companies House under expert supervision.
- Track PSCs and ensure ECCTA compliance with guided workflows.
What tools are available to help me stay compliant?
FormationsHunt provides:
- ID upload features, PSC notification alerts, and automated filing reminders.
- Direct verification and filing through our secure system.
- Digital records and audit trails with easy dashboard access.
- Share ownership tracking and real-time updates.
- Assisted PSC identity verification to ensure compliance with ECCTA rules.
Whether you’re a first-time founder or managing multiple companies, FormationsHunt keeps your share management compliant, secure, and stress-free.
Final Thoughts
Shares and shareholders form the foundation of UK company ownership. From issuing shares and drafting agreements to complying with the ECCTA reforms, every step matters for both legal protection and business growth.
With FormationsHunt, you don’t have to manage this alone. Our Online Company Manager ensures your records are always accurate, compliant, and up to date, while saving you hours of manual work.
Take control of your company’s share management today, sign in to FormationsHunt and stay ahead of compliance with ease.
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