Shareholder

What it means

A shareholder is the owner of a share, that is, a stake in the registered capital of a joint-stock company or a simple joint-stock company. Unlike a member of an s. r. o., a shareholder is not entered in the commercial register by name; their position follows from the share itself and from the register of shareholders.

A shareholder has three basic rights: to vote at the general meeting, to share in profit through a dividend, and to receive the liquidation balance when the company is wound up. Voting rights, classes of shares and restrictions on transfer are set by the statutes.

A shareholder is not liable for the company’s debts and risks only what they paid for the shares. They do not normally take part in management: the company is run by the board of directors, and shareholders influence it by electing and removing its members.

How it works in practice

Shares today are either book-entry or registered certificated shares, and for certificated shares the company keeps the register of shareholders itself. Every change of owner has to be recorded there, and the owner details carried into the register of beneficial owners.

A dividend paid to a shareholder who is an individual is taxed by withholding at payment. We therefore deal with the taxation of dividends together with the general meeting resolution, so that the company withholds and pays the tax on time. A Slovak company receiving a dividend as shareholder is generally not taxed on it.

Smaller joint-stock companies often have a single shareholder or a few who also sit on the board. We then keep the roles apart: what is a shareholder decision, what is a board decision and what is remuneration for holding office, because each is taxed and recorded differently.

What to watch out for

A majority shareholder may not abuse its vote to the detriment of the others. Minority shareholders can demand that a general meeting be called, obtain information about the company and have certain decisions reviewed by a court, and disputes over the meaning of the statutes tend to be long and expensive.

A common mistake is paying money to a shareholder outside a proper profit distribution, for example as an interest-free loan or by covering their private expenses. At an audit such payments may be treated as a hidden profit share with tax due, and the company has to claim the money back from the shareholder.