What shareholder means
A shareholder owns a slice of a company.
That ownership carries specific rights. Voting on matters reserved to the members, receiving dividends when they are declared, receiving information the law requires, and sharing in what is left if the company is wound up.
What it does not carry is the right to manage. Running the company belongs to the directors, and a shareholder who is not also a director has influence rather than control.
How it is used
In most Nigerian small companies, the founders are both shareholders and directors, so the distinction stays invisible until something goes wrong.
It surfaces during a fallout. A founder is removed as a director and assumes they have lost their stake, or the others assume that removing them as a director means they no longer own anything. Neither is true. Shares and directorships are separate, and dealing with one does nothing to the other.
Key features
- Owns shares recorded in the company's register of members
- Votes on matters reserved to members, in proportion to shareholding
- Entitled to dividends when declared, not automatically
- Liability generally limited to the amount unpaid on their shares
- Can sell or transfer shares, subject to the articles and any shareholders agreement
How this works in Nigeria
CAMA 2020 allows a single person to own and run a private company, so a company can have exactly one shareholder.
The most common structural mistake in Nigerian startups is a fifty fifty split between two founders with no shareholders agreement. It looks fair and it creates deadlock, because neither can pass anything the other opposes. Where it happens, the fix is a written agreement covering deadlock, exit and what happens if a founder stops contributing.
Shareholder vs director
A shareholder owns. A director manages.
Shareholders exercise power by voting, mainly on constitutional questions such as changing the articles, increasing share capital or removing a director. Directors take the operational decisions and owe fiduciary duties to the company.
Removing somebody as a director does not remove their shares. Buying somebody's shares does not automatically remove them as a director. In a founder dispute both steps are usually needed, and people regularly do one and assume they have done both.
Limits and risks
A minority shareholder has limited practical power. They can vote and they can inspect certain records, but they cannot direct the business, and dividends are declared by the company rather than demanded by them.
Shares in a private company are also illiquid. There is no market, transfers are usually restricted by the articles, and a minority stake in a company controlled by somebody else can be very hard to sell at a fair price.
Worth knowing
A fifty fifty split with no shareholders agreement is a deadlock waiting to happen. Agree how disputes and exits work while everybody is still friendly.