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Shareholders’ Rights – An Overview


238 Shareholders’ Rights–An OverviewA shareholder is a legal or natural person holding one or more shares in a public or private company. In Ireland, certain rights and entitlements are conferred on shareholders by common law and statute (Companies Acts (1963–2012)). Many of these rights may be limited or extended by shareholders’ agreement or by the company’s memorandum and articles of association. The basic rights conferred on shareholders may be detailed as follows;

Right To Information

Shareholders have the right to inspect and obtain copies of information and documentation pertaining to the company, including the company registers, minutes of general meetings, memorandum and articles of association, financial statements, and auditors’ reports. Shareholders are also entitled to sight of the balance sheets of any subsidiaries of the company.

Right To Attend & Vote At Meetings

Each shareholder has the right to receive notice of general meetings of the company, to attend at those meetings and to vote on issues raised.   

Right To Dividends

Dividends are payments made to shareholders out of a company’s distributable profits. Shareholders do not have an automatic right to receive dividend payments and there is no legal obligation on a company to declare a dividend, even in circumstances where it is in funds to do so. Only the directors of a company may propose a dividend, although the shareholders then have a right of approval.   

Notwithstanding the foregoing, once a dividend has been declared, the shareholders have a right to receive payment. In the event of non-payment, the shareholder may take legal action against the company. 

Rights On The Winding Up Of A Company

Shareholders have certain entitlements on the winding up of a company. Once all liabilities of the company have been discharged, including the costs of the liquidation, the shareholders’ are entitled to a return of their capital investment. Any assets then remaining in the company are divided and distributed amongst the shareholders in proportion to their respective interests. 

Rights Under Section 205 

A shareholder has a right under section 205 of the Companies Act 1963 (as amended) to commence legal proceedings against the company where the affairs of the company are being conducted in a manner oppressive to any shareholder, or in disregard of any shareholders’ interests. Conduct is oppressive when it is burdensome, harsh and wrongful.

Rights Under Section 213(f)

Disgruntled shareholders have the right under section 213(f) of the Companies Act 1963 (as amended) to petition the High Court to have a company wound up on just and equitable grounds. 

A Word Of Caution

As mentioned, certain of the rights outlined above are not absolute and may be restricted by agreement or by the company’s articles. Therefore, any individual or entity contemplating the acquisition of shares in a company should ensure that they familiarise themselves with all relevant corporate documentation. Legal advice should be sought as appropriate.    

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