Director / Shareholder.

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patmcc

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Apologies if this has been asked before. But is there anywhere I can see an explanation as to the differences between a director and a shareholder?
 
A shareholder is purely a provider of share capital to a company. In other words, they are a part owner of the company. Their liability is limited to the capital they have put in. They have no responsibilities.

A director is appointed by the shareholders at an AGM to represent their interests in the company. They have very onerous responsibilities which are summarised [broken link removed].

In a large publicly quoted company such as CRH plc, there are thousands of shareholders and maybe a dozen directors.

In a small private "one man" company there are often two shareholders each of which is also a director.

"Executive" directors are full time employees of the company. "Non-executive" directors are not full-time employees. However, I don't think that there is any difference in their responsibilities as directors.
 
Further split of Non-Executive Directors

Independent Non-Executive Directors = No shares, Not an employee
Grey Non-Executive Directors = Hold shares, not an employee
 
And a shareholder could be a "shadow director" (basically deemed to be a director) if he or she exercises control through the actual directors (e.g. appoints stooges as directors who do his or her bidding without fail).
 
manninp2 said:
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Independent Non-Executive Directors = No shares, Not an employee
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I didn't think that it was requirement of an independent director not to hold shares?

I assumed it was not a former employee or someone who was not trading with the company.
 
Brendan Burgess said:
I didn't think that it was requirement of an independent director not to hold shares?

I assumed it was not a former employee or someone who was not trading with the company.
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I think that the requirements are set out in the Combined Code for Corporate Governance.
 
It's pretty new terminology. I'm taking a course in corporate governance at the moment.

It's not a legal term but then that's been the problem with Corporate Governance for the last couple of decades, to much letter and not enough spirit of the law.
 
manninp2 said:
It's pretty new terminology. I'm taking a course in corporate governance at the moment.

It's not a legal term but then that's been the problem with Corporate Governance for the last couple of decades, to much letter and not enough spirit of the law.
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The Code is very good though in that it explicitly states that it's the spirit that matters most.
 
A small bit of showing off, going on here. I think the op was looking for a straight forward answer of the difference between directors and shareholders.
 
If you go onto the CRO website or the OCDE website there are very good publications/handbooks outlining the duties/responsibilities of Directors and Shareholders
 
Just to note that there is NO difference in law between ANY types of Directors, whether they have shares or not.

Directors duties are fairly onerous. None of these apply to a shareholder and a shareholder does not for example have fiduciary duties to other shareholders.
 
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