The following sections set out the primary powers of shareholders under the Companies Acts, under secondary legislation and related case law. Further information on the roles of members and shareholders can be found in the ODCE Information Book entitled "The Principal Duties and Powers of Members and Shareholders" which is available for download at the end of this page.
Shareholder
A shareholder is a person who holds a share or shares in a company. A member of a company which is limited by shares must be a shareholder in the company. In practical terms, a shareholder will invariably be a member of a company.
Articles of Association
The articles of association of a company set out the powers of members and those powers which are delegated by the members to the directors of the company.
The articles generally provide that the business of the company is managed by the directors, subject to the provisions of the articles of association and to such directions given by the members in a general meeting.
A number of fundamental matters must be ratified by the members, such as an alteration of the company’s articles of association. By amending the articles of association, members can alter their relationship with the directors.
Transfer of Shares
A member’s shares in a company are transferable personal property. In a private company however, restrictions must be placed on the transfer of shares.
Right to a Dividend
A dividend is a distribution of certain of the company’s assets to its shareholders. Dividends can only be proposed by the directors. Where the directors propose a dividend, it must then be approved by the members.
Shareholders’ Statutory Pre-emption Rights (Private Companies Only)
Section 23 of the Companies (Amendment) Act, 1983 gives the existing members of a private company a statutory ‘pre-emption’ right. This means that, where new shares in the company are issued, the existing shareholders have an automatic right of first refusal to purchase these shares in proportion to their existing shareholdings.
Right to Participate in a Winding-Up
A shareholder has the right to participate in the winding up of a company. Once the creditors and expenses of the liquidator have been paid, any remaining funds are returned to the shareholders in proportion to their shareholdings, unless the articles of association provide otherwise.
Rights Regarding Members’ Meetings
The members of the company exercise control over the company at its meetings. The main statutory provisions concerning meetings of a company are set out at sections 131 to 146 of the Companies Act, 1963 (as amended).
Right to Notice of Meetings
At least 21 days’ notice must be given in writing of an AGM. In the case of an EGM, 7 days’ notice is required for private companies and 14 days for public companies.
Members’ Powers where the Company is in Default
Where a company or any of its officers is in default in complying with any provision of the Companies Acts, a member can serve a notice on the company requiring the default to be made good within 14 days.
Right of Members to apply for the Restoration of a Company which has been Struck Off the Register of Companies
Where a company has been struck off as a consequence of failing to file an annual return the liability, if any, of every director officer and member of the company continues and may be enforced as though the company had not been dissolved.
If a member of the company is aggrieved at the company’s strike off, they can apply to the Registrar of Companies for the restoration of the Company within 12 months of the strike off.
Members’ Right to Seek an Investigation of a Company
Certain qualifying members can apply to the High Court for the appointment of one or more Inspectors to investigate and report on the affairs of a company.
Right to Petition for the Winding Up of a Company
A member has the right to petition the High Court for the winding up of a company on a number of grounds (subject to certain exceptions).
Right to Petition for Relief in Cases of Oppression
A member cannot bring proceedings to overturn a decision of the company where that decision could be ratified by a majority of its members. However, a member of a company can petition the High Court for relief where they consider that the affairs of the company are being conducted, or the powers of the directors are being exercised, in a manner oppressive to that member or to any of the members or is in disregard of their interests as members.
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