Understanding Directors & Shareholders

Quick Overview

Every UK limited company needs at least one director and at least one shareholder — often the same person in a small company. Directors run the company day to day, while shareholders own it and are entitled to a share of its profits.

Who This Guide Is For

This guide is for founders forming a company for the first time who want to understand what each role involves before deciding how to structure it.

What Directors Do

Directors are legally responsible for running the company in line with its articles of association and their statutory duties, which include acting in the company's best interests, keeping proper accounting records, and filing statutory documents (such as accounts and confirmation statements) on time.

What Shareholders Do

Shareholders own shares in the company, which generally entitles them to a portion of any profits distributed as dividends and a say in certain company decisions, in proportion to their shareholding. In a small company, a director is often also the sole shareholder.

Key Differences

• Directors manage the company and carry statutory legal duties.
• Shareholders own the company and hold voting rights tied to their shares.
• A person can hold both roles at once, or the roles can be split between different people.

Important Considerations

Details of directors and (for most companies) people with significant control are publicly available on the Companies House register. Requirements for identity verification of directors have also been introduced under recent UK company law changes.