Being a director VS being a shareholder

You are the director of a private PTY LTD company with one other director. You both hold one equal share.

If you resign as a director but remain a shareholder what say do you have in how the company's profits are distributed and the level of director fees?

Does the sole director have to put it to you as the other shareholder to vote on these issues or can they just railroad you in submission? I ask because shareholders of publicly listed companies don't seem to have much say on how much of the profits are disbursed as dividends though they do vote on director salaries.
 
Your P/L documents should have all the rules and regs of what you can and can't do as directors & shareholders.
If it takes >50% of shareholders to pass a motion or new rule, then a 2 shareholder P/L has to have both agreeing on that motion.
If the directors decide not to pay out a dividend , what can a minority shareholder do? Do you need more than 50% of votes to change that?

In publicly listed corps they are minority shareholders that have no say.
You can't expect to be paid much attention if you own a few thousand BHP shares.
But if you own 20%, they'll be asking you if it's ok, before they do anything.
Of course it's all laid out in the corp's constitution. eg below
http://www.google.com.au/url?sa=t&s...n+2008&usg=AFQjCNH3lC5RecWARkV-MAeeELni-v9NSg

That's my pov
 
Your company will be governed by a constitution or by replaceable rules. If it is an old company it is more likely to have a constitution.

I think it works, generally, like this:
Directors control the day to day operation of the company. They determine how funds are spent and how much people are paid etc. If the shareholders do not like this they can vote to remove a director.

have a browse of the Corporations Act 2001.

some relevant sections may be:

s 202A remuneration of directors:
(1) The directors of a company are to be paid the remuneration that the company determines by resolution. (this is a replaceable rule)
http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s202a.html

Having only 2 equal shareholders will make voting difficult. Shareholders can get a director removed, s 203C, but you won't have a majority.

Directors can pass resolutions by a vote of all directors, s 248G (replaceable rule)
http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s248g.html

Directors determine if a dividend is payable and the amount, s 254U
http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s254u.html
 
Back
Top