{"id":1708,"date":"2022-01-12T04:03:04","date_gmt":"2022-01-12T04:03:04","guid":{"rendered":"https:\/\/uk.legalvision.com.au\/?p=1708"},"modified":"2025-07-15T00:57:39","modified_gmt":"2025-07-14T23:57:39","slug":"rights-of-shareholders","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/corporations\/rights-of-shareholders\/","title":{"rendered":"Obligations and Rights of Shareholders"},"content":{"rendered":"\n

If you are a shareholder of a company registered in the UK, you may wonder about your obligations to other shareholders and the company itself. For instance, do you have to pay the company\u2019s debts if it cannot? Or must you act with other shareholders in mind? Alternatively, you may also wonder what rights you have as a shareholder and how you can enforce these rights in the event of a dispute. This article will provide an overview of the various obligations you owe and the rights you enjoy as a shareholder.<\/span><\/p>\n\n\n\n

Obligations vs Rights<\/span><\/h2>\n\n\n\n

Obligations and rights refer to two sides of the same coin. If Rahul owes you an obligation, you have a right against Rahul. If Rahul has a right against you, you owe Rahul an obligation. <\/span><\/p>\n\n\n\n

An obligation refers to something that you must do for some reason. For instance, if you enter into a lawful contract, you have a contractual obligation to fulfil your end of the contract. Otherwise, you can be held liable for your failure to do so. <\/span><\/p>\n\n\n\n

Ultimately, this means a court can order you with the force of law to refrain from or perform some action in the contract. Likewise, they can order you to pay some money as a consequence of you not fulfilling your obligation.  <\/span><\/p>\n\n\n\n

On the other hand, rights refer to your ability to require someone else to fulfil their own obligation in your favour or interest. If they do not, you can ultimately petition a court to order them to do so or to pay you a sum of money in place of their failure to do so. <\/span><\/p>\n\n\n\n

Shareholder Obligations<\/span><\/h2>\n\n\n\n

Limited Liability <\/span><\/h3>\n\n\n\n

Under English and Welsh company law, you will tend to find that the law gives shareholders far more rights than it imposes upon them certain obligations. <\/span><\/p>\n\n\n\n

In fact, the concept of limited liability means that despite owning a company, shareholders have limited responsibility for their company’s obligations. <\/span><\/p>\n\n\n\n

Usually, when shareholders pay for company shares, their liability is limited to that value. So, when the company is growing and paying its debts as they come due, this is not a concern. <\/span><\/p>\n\n\n\n

However, if the company can no longer meet its obligations, its creditors may initiate insolvency proceedings to recover their money. Usually, when this happens, the company does not have enough money to pay back all the creditors in full. The concept of limited liability means that they cannot come after the shareholders for any remaining amount (provided there is no fraud or unlawful activity). <\/span><\/p>\n\n\n\n

Obligations Under the Articles of Association<\/span><\/h3>\n\n\n\n

The company\u2019s articles of association is the primary source of the rules that govern the company and the relationship between it and the shareholders. It creates a particular contract between:<\/span><\/p>\n\n\n\n