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Promoters, directors and shares

Promoters, directors and shares

Postby kachibibi » Sun Aug 03, 2014 4:43 am

For a PRIVATE limited company, can I conclude that...

1) the promoters of the company will normally become the MAJOR shareholders of that company? Normally, there should be no other shareholders because it is not like a listed company which can always invite new shareholders. This also explains there are normally no MINOR shareholders and the existing shareholders are therefore MAJOR ones in the private limited company?

2) directors of a private limited company are normally the shareholders and by what I said above they are also MAJOR ones (they also need to have a kind of shares called qualification shares in order to become directors, so this also explains directors tend to hold most shares)?

In conclusion, in a private limited company where the entry of new shareholders is restricted (unlike a listed company), the promoters are normally= directors= only and major shareholders?
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Re: Promoters, directors and shares

Postby dls » Sun Aug 03, 2014 5:30 am

The use of the word 'normally' risks misleading. In pure number terms, how frequently an arrangement arises, you may be right, but you have to recognise that companies are formed in a very wide range of circumstances, and that arrangements are reflected in the company set up.
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Re: Promoters, directors and shares

Postby atticus » Sun Aug 03, 2014 7:47 am

Q1 no.

Q2 no.

Private companies are many and varied.
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Re: Promoters, directors and shares

Postby Hairyloon » Sun Aug 03, 2014 8:15 am

dls wrote:The use of the word 'normally' risks misleading...

Is it fair to say that a thing is normal if it is not abnormal, or is there a gap in between?
If there is a gap, then how are the things in between described?
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Re: Promoters, directors and shares

Postby atticus » Sun Aug 03, 2014 8:44 am

I suggest that your approach to the definition of words is not always the same as others'; and that you and the OP mean different things by the word "normal".

What is your experience of private limited companies? The OP will be pleased to hear your views on his questions.
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