Member (shareholder)

What it means

A member owns a share in a limited liability company. The share represents participation in the company and carries rights: to vote at the general meeting, to share in profit and in any liquidation surplus.

It is not the same as being a managing director. The member owns, the director runs - one person can be both, but they are two distinct positions with different liability.

A member entered in the register need not be the ultimate beneficial owner. Where the member is another company or someone acting for another person, the beneficial owner is the individual who actually controls the share or benefits from it, and that person is recorded separately.

How it works in practice

Members’ contributions form the share capital and the shares are entered in the commercial register. A transfer is made by written agreement with certified signatures and takes effect against the company on delivery.

A member shares in profit through a profit share once the accounts are approved. Where they also work for the company, that needs its own legal basis - an employment contract or a contract for the performance of office.

When the company needs money, a member can provide it as a shareholder loan or as an additional contribution outside share capital. The company repays a loan and may pay interest on it, while a contribution increases equity and can be returned only on the conditions the law sets, so we choose the form with the client depending on whether the need is a temporary gap or a lasting need for capital.

What to watch out for

A member’s liability is limited but not nil: they are liable up to any unpaid contribution, and more widely in specific cases. With several members, how relationships and disputes are handled goes into the founding deed in advance, not once a dispute arises.

Money taken out of the company without a legal basis, such as an informal loan to a member, is not that member’s profit. If it is not backed by a contract and repaid, an audit may treat it as a hidden profit distribution, and for a company in crisis the law directly restricts payments to members as well.